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

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

2. If the FED lowers the RR to stimulate the economy and begins to accomplish its intended consequences, each of the following will happen EXCEPT:

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

3. The ultimate goal of expansionary monetary policy is:

A) to keep inflation relatively stable.
B) to help get the economy back toward full employment.
C) to help influence households and firms to borrow to stimulate the economy.
D) to help drive interest rates down.
E) all of the above answers are correct.