11
practice testMultiple Choice

Practice Test

Question 11 • Economics

Which statement describes how borrowers will most likely benefit when the Fed reduces reserve requirements?

Answer
A
Loan requirements will likely be relaxed.
B
Investment opportunities will likely improve.
C
Interest rates will likely decrease.
D
Housing prices will likely decrease.

Explanation

When the Fed reduces reserve requirements, banks can lend a larger share of their deposits. The increased supply of money available for loans tends to push interest rates down, making borrowing less costly. Therefore, borrowers will most likely benefit because interest rates will likely decrease.

AI-written and checked against the verified answer.

Previous
Next