Which of the following is NOT correct about required reserve ratio?
What will be an ideal response?
lower required reserve ratio causes lower risk of bank fails
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If nominal GDP increases this year, then real GDP
A) could either increase or not change but cannot decrease. B) must decrease. C) must increase. D) must not change. E) could increase, decrease, or not change.
The slope of the IS curve will be flatter the __________ is the sensitivity of investment to a unit change in the interest rate and the __________ is marginal propensity to save
A) greater; larger B) greater; smaller C) less; larger D) less; smaller
Behind the Glass-Steagall Act was the feeling that __________ is too risky for commercial banks
A) underwriting corporate securities B) competing to pay high deposit rates C) making business mortgage loans D) interstate branching
According to the Gordon-Growth model, which of the following can cause the value of a stock to decline?
A) higher expected growth rate of dividends B) increase in the current dividend C) increased systemic risk D) decreased required return on equity