The Fed seldom uses the reserve requirement ratio to influence the money supply. What is the reason for this?
A) It is difficult and costly for the Fed to monitor compliance.
B) Frequent manipulation of reserve requirements would require bankers to constantly adjust their lending policies to changing requirements, which could be destabilizing for financial markets.
C) The Fed would like to discourage banks from making loans indiscriminately and therefore sets just one standard.
D) Reserves in excess of a certain amount will not be covered by the Federal Depository Insurance Corporation.
Ans: B) Frequent manipulation of reserve requirements would require bankers to constantly adjust their lending policies to changing requirements, which could be destabilizing for financial markets.
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Products are homogenous when:
A. they are identical in the eyes of the purchasers B. some purchasers view the products as different C. suppliers can charge different prices for the same good D. they meet basic safety standards.
As a result of a successful attempt by government to cut the economic pie into more equal slices,
a. the pie gets larger, and there will be more pie overall. b. the pie gets smaller, and there will be less pie overall. c. it increases the reward for working hard, resulting in people producing more goods and services. d. those who earn more income pay less in taxes.
Studies have shown that maximum tax revenues occurred in Sweden at marginal income tax rates between ______.
a. 10 and 20 percent b. 40 and 50 percent c. 70 and 80 percent d. 90 and 100 percent
Sarah's demand curve for shoes has the same slope as Pete's; however, it lies to the right of Pete's. An increase in the price of shoes will cause
A) Sarah to incur a greater loss of consumer surplus than Pete will. B) Pete to incur a greater loss of consumer surplus than Sarah will. C) Sarah and Pete to incur the same loss of consumer surplus. D) Sarah's demand curve to shift closer to Pete's.