A lowering of the required reserve ratio might not expand the money supply if:
a. tax rates are also lowered at the same time.
b. tax rates are increased at the same time.
c. borrowers are unwilling to borrow the new funds the banks have available for loans.
d. borrowers are willing to borrow the new funds the banks have available for loans..
e. borrowers expand their borrowing because of the lower interest rates that banks offer.
Question 2
When the Fed decreases the required reserve ratio, then the:
a. ability of banks to make loans is restricted.
b. ability of banks to make loans is enhanced.
c. ability of banks to make loans is unaffected.
d. interest rate that banks pay to the Fed to borrow money is reduced.
e. interest rate that banks pay other banks to borrow money is decreased.
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