The Fed is considering increasing the amount of money that banks are required to keep in their vault. This amount is known as the ________ and an increase would most likely cause ________ to interest rates.
A) discount rate; no change
B) indenture term; a decrease
C) reserve requirement; an increase
D) reserve requirement; a decrease
E) discount rate; an increase

Question

Quizplus · Accepted Answer

An increase in the reserve requirement means banks have less money to lend out, which can lead to higher interest rates as the supply of available money decreases.

The Fed Is Considering Increasing the Amount of Money That