In the context of monetary policy, if the Fed decreases the reserve requirement, _____.
A) there will be more loans available
B) the availability of credit will decrease
C) banks will need to hold more funds
D) interest rates will increase

Question

Quizplus · Accepted Answer

Decreasing the reserve requirement means that banks are required to hold less money in reserve, which means they have more money available to lend out. This will increase the availability of credit and lower interest rates.

In the Context of Monetary Policy, If the Fed Decreases