1. If the FED raises the RR (reserve requirement ratio), then

A) excess reserves go down.
B) banks have less money to lend.
C) if banks call in loans, the MS decreases.
D) if banks hold excess reserves, the nominal interest rate goes up and C and I go down.
E) all of the above answers are correct.

2. If the FED raises the RR to contract (slow down) the economy and begins to accomplish its intended consequences, each of the following will happen EXCEPT:

A) unemployment goes up.
B) real GDP goes down.
C) excess reserves go up.
D) nominal interest rates go up.
E) national Y goes down.

3. The ultimate goal of contractionary monetary policy is:

A) to keep inflation relatively stable.
B) to help get the economy back toward full employment.
C) to lower excess reserves.
D) to help drive interest rates up.
E) all of the above answers are correct.