If the desired reserve ratio decreases, then A) banks are able ...

[leo leo]

If the desired reserve ratio decreases, then
 
  A) banks are able to make more loans.
  B) banks' desired reserves decrease and their excess reserves do not change.
  C) banks' desired reserves increase and their excess reserves decrease.
  D) banks are forced to buy fewer government securities.
  E) bank customers become more willing to make deposits in banks.

Question 2

The velocity of circulation is the average speed with which money is loaned to businesses and households. Is the previous statement correct or incorrect?
 
  What will be an ideal response?

[fur]

Answer to Question 1

A

Answer to Question 2

The statement is incorrect. The velocity of circulation is the average number of times in a year that each dollar of money is used to purchase final goods and services.

[leo leo]

Thanks for the timely response, appreciate it

[tkempin]

Excellent