Lowering the required reserve ratio causes Question 8 options: A) the money supp

Question

Lowering the required reserve ratio causes

Question 8 options:

A) the money supply to decrease.

B) the money multiplier to increase.

C) a decline in banks' excess reservers.

D) the bank to make fewer loans.

Which of the following is an appropriate monetary policy if the Fed wants to decrease the money supply?

Question 9 options:

A) A decrease in the required reserve ratio.

B) An increase in the discount rate.

C) Purchase of bonds in open market operations.

D) Lower taxes on interest income

Economists estimate that the total lag for monetary policy is about

Question 10 options:

A) 1 - 2 days.

B) 2 weeks to 1 month.

C) 3 - 12 months.

D) 2 - 4 years.

Explanation / Answer

Answer 8:

Lowering the required reserve ratio causes the money multiplier to increase because if the federal government reduces reserve ratio the quantity of cash in the economy will increase and due to this the money multiplier will also increase.

Question 9:

If federal government wants to decrease money supply there is a increase in discount rates.

Question 10:

Economists estimate that the total lag for monetary policy is about 2 weeks to 1 months.

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.