In the context of monetary policy, which of the following is a result of an increase in the reserve requirement?
A) Banks can no longer hold any funds.
B) Number of bank loans begin to increase.
C) Interest rates begin to rise.
D) Credit becomes readily available.

Question

Quizplus · Accepted Answer

An increase in the reserve requirement means banks must hold more funds in reserve and have less available to lend, leading to a decrease in the supply of money. This typically causes interest rates to rise as the cost of borrowing increases.

In the Context of Monetary Policy, Which of the Following