Question

Coose the correct answer:

A) A commercial bank creates money in the process of:
B) Monetary policy is carried out by:
C)By raising the required reserve ratio, the Fed instigates changes in banks' behavior that will ultimately result in

Answer 1

How does a a commercial bank create money ?
By making loans to the public -this means that extra money will enter the market!

Monetary policy is the responsibility of the Federal reserve! -The central bank of the country.

And the answer to the lasst question is that it would lead to a decrease in the quantity of money-since more money would have to stay in the reserve!