Question
Explain how adjusting the reserve requirement can have either a positive or negative impact on the economy depending on the change.(1 point)
Responses
Increasing the reserve rate increases a bank's ability to lend money, stimulating the economy. Decreasing the reserve rate decreases a bank's ability to lend money, slowing the economy.
Increasing the reserve rate increases a bank's ability to lend money, stimulating the economy. Decreasing the reserve rate decreases a bank's ability to lend money, slowing the economy.
Increasing the reserve rate decreases a bank's ability to lend money, stimulating the economy. Decreasing the reserve rate increases a bank's ability to lend money, slowing the economy.
Increasing the reserve rate decreases a bank's ability to lend money, stimulating the economy. Decreasing the reserve rate increases a bank's ability to lend money, slowing the economy.
Increasing the reserve rate decreases a bank's ability to lend money, slowing the economy. Decreasing the reserve rate increases a bank's ability to lend money, stimulating the economy.
Increasing the reserve rate decreases a bank's ability to lend money, slowing the economy. Decreasing the reserve rate increases a bank's ability to lend money, stimulating the economy.
Increasing the reserve rate increases a bank's ability to lend money, slowing the economy. Decreasing the reserve rate decreases a bank's ability to lend money, stimulating the economy.
Responses
Increasing the reserve rate increases a bank's ability to lend money, stimulating the economy. Decreasing the reserve rate decreases a bank's ability to lend money, slowing the economy.
Increasing the reserve rate increases a bank's ability to lend money, stimulating the economy. Decreasing the reserve rate decreases a bank's ability to lend money, slowing the economy.
Increasing the reserve rate decreases a bank's ability to lend money, stimulating the economy. Decreasing the reserve rate increases a bank's ability to lend money, slowing the economy.
Increasing the reserve rate decreases a bank's ability to lend money, stimulating the economy. Decreasing the reserve rate increases a bank's ability to lend money, slowing the economy.
Increasing the reserve rate decreases a bank's ability to lend money, slowing the economy. Decreasing the reserve rate increases a bank's ability to lend money, stimulating the economy.
Increasing the reserve rate decreases a bank's ability to lend money, slowing the economy. Decreasing the reserve rate increases a bank's ability to lend money, stimulating the economy.
Increasing the reserve rate increases a bank's ability to lend money, slowing the economy. Decreasing the reserve rate decreases a bank's ability to lend money, stimulating the economy.
Answers
Answered by
GPT-4o mini
The correct response is:
**Increasing the reserve rate decreases a bank's ability to lend money, slowing the economy. Decreasing the reserve rate increases a bank's ability to lend money, stimulating the economy.**
**Explanation:**
- When the reserve requirement is increased, banks are required to hold a higher percentage of their deposits as reserves, which means they have less money available to lend. This can lead to a contraction in the money supply, potentially slowing economic activity as businesses and consumers may find it more difficult to obtain loans.
- Conversely, when the reserve requirement is decreased, banks are allowed to hold a smaller percentage of their deposits in reserves, freeing up more capital for lending. This can stimulate economic activity by making it easier for businesses and consumers to access credit, thereby encouraging spending and investment.
Thus, adjusting the reserve requirement can have significant implications for the economy, depending on whether it is increased or decreased.
**Increasing the reserve rate decreases a bank's ability to lend money, slowing the economy. Decreasing the reserve rate increases a bank's ability to lend money, stimulating the economy.**
**Explanation:**
- When the reserve requirement is increased, banks are required to hold a higher percentage of their deposits as reserves, which means they have less money available to lend. This can lead to a contraction in the money supply, potentially slowing economic activity as businesses and consumers may find it more difficult to obtain loans.
- Conversely, when the reserve requirement is decreased, banks are allowed to hold a smaller percentage of their deposits in reserves, freeing up more capital for lending. This can stimulate economic activity by making it easier for businesses and consumers to access credit, thereby encouraging spending and investment.
Thus, adjusting the reserve requirement can have significant implications for the economy, depending on whether it is increased or decreased.
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