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Which of the following best explains why raising the required reserve ratio results in a decrease in the money supply?
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
Which of the following can the Fed accomplish by raising or lowering the required reserve ratio?
Increase or decrease the money supply
Why is raising the required reserve ratio results in a decrease in the money supply?
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
What best explains why raising he required reserve ratio results in a decrease in the money supply?
Raising the required reserve ratio means that banks must hold a larger percentage of deposits as reserves and can lend out less money. This reduces the amount of money available for loans and, consequently, decreases the overall money supply in the economy. With fewer loans being issued, there is less money circulating, which can lead to tighter credit conditions and potentially slow down economic activity.
How can the Fed decrease the money supply?
The Federal Reserve can decrease the money supply by selling government securities, increasing the reserve requirements for banks, or raising the discount rate.
Which of the following best explains why raising the required reserve ratio results in a decrease in the money supply?
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
Which of the following can the Fed accomplish by raising or lowering the required reserve ratio?
Increase or decrease the money supply
Why is raising the required reserve ratio results in a decrease in the money supply?
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
How can the Fed decrease the money supply?
The Federal Reserve can decrease the money supply by selling government securities, increasing the reserve requirements for banks, or raising the discount rate.
What actions could the Federal Reserve take to decrease the money supply?
The Federal Reserve could decrease the money supply by raising interest rates, selling government securities, or increasing reserve requirements for banks.
What accurately describes how raising the required reserve reserve ratio reduces the money supply?
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
What accurately describes how raising the required reserve ratio reduces the money supply?
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
What accurately describes how raising the required reserve ratios reduces the money supply?
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
Would the money supply increase or decrease if the required reserve ratio was lowered from 20 percent to 10 percent?
That would be decrease
What can the Fed accomplish by raising or lowering the required reserve ratio?
If they lower the ratio, banks do not have to hold as much cash (which gains no interest), the banks will attempt to loan this money out and make money, this can stimulate investment. Increase or decrease in the money supply (APEX)
What FED accomplish by raising or lowering the required reserve ratio?
To manage the economy by increasing or decreasing the amount of loans being made
Everything else held constant a decrease in the required reserve ratio on checkable deposits will mean?
increase in money supply
