Operating Under Severe Recessionary Conditions,the Federal Reserve System Decides to Reduce

Multiple Choice

Operating under severe recessionary conditions,the Federal Reserve System decides to reduce its reserve requirements from the current level of 9% to 7.5%.Which of the following is likely to happen following the Fed's move?

A) The rate of unemployment will double.
B) The rate of growth in the economy will fall drastically.
C) It increases the availability of credit with the commercial banks.
D) Businesses will find it difficult to borrow at cheaper rates of interest.