Does the raising of reserve requirements automatically decrease the money supply? Why or why not?


What will be an ideal response?


No, it is possible to increase the reserve requirement and still experience an increase in the money supply if the banks are holding excess reserves. If the increase in the reserve requirement is insufficient to raise required reserves to the level of total reserves, some excess reserves remain. Banks may use remaining excess reserves to increase the money.

Economics

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In calculating the IS curve, _______ is taken as exogenous

a. the interest rate. b. aggregate income. c. the price level. d. planned investment. e. a and d.

Economics

According to Samuel Gompers, the founder of the AFL,

A. unions should attempt to organize all workers. B. labor should form a political party and run candidates for public office. C. labor should seek government intervention in the labor-management relationship. D. labor should concentrate on bread-and-butter issues.

Economics

Which of the following is not a major category of business structure?

A. Sole proprietorship B. Partnership C. Public agency D. Corporation

Economics

The marginal factor cost of a monopsonist is

A. upward sloping and rises faster than the supply curve. B. downward sloping when the supply curve of labor is upward sloping. C. horizontal. D. upward sloping and the same as the supply curve.

Economics