Author Question: If the Fed decreases the required reserve ratio at a time when banks are holding no excess reserves, ... (Read 31 times)

Awilson837 · **on:** Jun 30, 2018

If the Fed decreases the required reserve ratio at a time when banks are holding no excess reserves, the Fed is:
a. forcing banks to increase the money supply.
b. forcing banks to decrease the money supply.
c. making it possible for banks to increase the money supply but not forcing them to do so.
d. making it possible for banks to decrease the money supply but not forcing them to do so.
e. conducting open market operations but not changing the money supply.

Question 2

The smaller the marginal propensity to save, other things constant, _____.
a. the smaller the marginal propensity to consume
b. the larger the multiplier
c. the smaller the multiplier
d. the flatter the consumption function
e. the steeper the saving function