If the Fed decreases the required reserve ratio at a time when banks are holding no excess reserves, the Fed is:
a. forcing banks to increase the money supply
b. forcing banks to decrease the money supply.
c. making it possible for banks to increase the money supply but not forcing them to do so.
d. making it possible for banks to decrease the money supply but not forcing them to do so.
e. conducting open market operations but not changing the money supply.
c
You might also like to view...
An upward-sloping supply curve suggests that producers
A) sell less at higher prices. B) sell more at lower prices. C) plan to sell more at a given, higher price. D) ignore marginal costs of production, and only focus on the demand for their product.
What will happen to the annual rate of growth of per capita real GDP if real GDP grows at a constant rate of 4.5 percent and the annual rate of population growth goes from 3 percent to 3.5 percent?
A) The annual rate of growth of per capita real GDP will increase from 7.5 percent to 8 percent. B) The annual rate of growth of per capita real GDP will increase from -1.5 percent to -1 percent. C) The annual rate of growth of per capita real GDP will remain unchanged. D) The annual rate of growth of per capita real GDP will decrease from 1.5 percent to 1 percent.