If the Fed were to change the reserve requirement in an effort to increase the money supply, they would:
A) increase the reserve requirement.
B) decrease the reserve requirement.
C) open the discount window longer.
D) increase the discount rate.

Question

Quizplus · Accepted Answer

Decreasing the reserve requirement would lower the amount of reserves banks are required to hold, allowing them to lend out more money and increasing the money supply. Increasing the reserve requirement would have the opposite effect. Opening the discount window longer or increasing the discount rate may also have some impact on the money supply, but these actions are not directly related to the reserve requirement.

If the Fed Were to Change the Reserve Requirement in an Effort