Other things the same,if reserve requirements are increased,the reserve ratio
A)increases,the money multiplier increases,and the money supply increases.
B)increases,the money multiplier decreases,and the money supply decreases.
C)decreases,the money multiplier increases,and the money supply increases.
D)decreases,the money multiplier decreases,and the money supply increases.

Question

Quizplus · Accepted Answer

If reserve requirements are increased, banks will have to hold a higher percentage of their deposits as reserves, which means that they will have less money to lend out. This will decrease the money multiplier and the overall money supply in the economy.

Other Things the Same,if Reserve Requirements Are Increased,the Reserve Ratio