Question

Which statement describes how borrowers will most likely benefit when the Fed reduces reserve requirements? Loan requirements will likely be relaxed. Interest rates will likely decrease. Housing prices will likely decrease. Investment opportunities will likely improve.

Answer 1

Answer:

B. Interest rates will likely decrease.

Explanation:

Answer 2

The statement describes how borrowers will most likely benefit when the Fed reduces reserve requirements is that interest rates will likely decrease.

How does Fed respond to recessions?

In the time of recessions, the Fed do uses different monetary policy tools in order to reduce unemployment rates and re-inflate prices.

These tools are said to be open market asset purchases, reserve regulation, etc. Borrowers will most likely benefit when the Fed reduces reserve requirements when interest rates will likely decrease.

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