A reduction in the required reserve ratio has the instant effect ...

[robinn137]

A reduction in the required reserve ratio has the instant effect of:
 a. Increasing the monetary base.
  b. Increasing total bank reserves
  c. Increasing excess reserves.
  d. Increasing bank shareholders' equity.
  e. Decreasing bank shareholders' equity.

Question 2

Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
 a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive).
  b. The GDP Price Index and reserve-related (central bank) transactions remain the same.
  c. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same.
  d. The GDP Price Index rises, and reserve-related (central bank) transactions become more positive (or less negative).
  e. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same.

[princessflame2016]

Answer to Question 1

.C

Answer to Question 2

.E