How the Reserve Ratio Affects the Money Supply


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question 1 of 3

What is the reserve requirement?

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1. In a fractional reserve banking system, how does a decrease in reserve requirements affect the money supply?

2. If the Federal Reserve lowers reserve requirements, nominal GDP will most likely do which of the following?

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About This Quiz & Worksheet

The quiz will test you on definitions. The questions will provide you with a term and then you will need to choose the correct definition. Fractional reserve banking systems and nominal GDP will be covered.

Quiz & Worksheet Goals

The assessment will test you on the following:

  • Reserve ratio
  • Fractional reserve banking systems
  • Federal Reserve
  • Money multiplier

Skills Practiced

The quiz will help you practice the following skills:

  • Reading comprehension - ensure that you draw the most important information from the related reserve ratios lesson
  • Making connections - use understanding of the concept nominal GDP
  • Interpreting information - verify that you can read information regarding Federal Reserves and interpret it correctly

Additional Learning

Finish the quiz and head over to the related lesson How the Reserve Ratio Affects the Money Supply. The partner lesson will help you with these objectives:

  • Defining the reserve requirement
  • Exploring the monetary policy
  • Understanding the Federal Reserve
  • Detailing the role of money multiplier
  • Calculating the money multiplier