If the Federal Reserve is currently paying 0.75% interest on bank reserves, but then increases that interest rate to 1%, banks may decide to hold ________ reserves, and the money supply may ________.
A. more; decrease
B. more; increase
C. fewer; decrease
D. fewer; increase
Answer: A
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Answer the question using the table. Figures are in billions of dollars. The equilibrium interest rate and quantity of loanable funds demanded and supplied in this market will be
A. 12 percent and $22 billion. B. 14 percent and $26 billion. C. 10 percent and $18 billion.
Which of the following factors will NOT increase economic development?
A) establishing a system of property rights B) increasing the amount of protectionism C) increasing the amount of education in the population D) creative destruction where old jobs, companies and industries are destroyed
The expenditure multiplier is greatest when the
A) LM curve is positively sloped. B) LM curve is horizontal. C) IS curve is vertical. D) LM curve is vertical.
Under a fixed exchange rate system, at low domestic real interest rates the demand for domestic currency ________, so the central bank ________ foreign-exchange reserves
A) increases; acquires B) increases; loses C) decreases; acquires D) decreases; loses