Which of the Following Statements BEST Describes Why a Decrease

question 109

Multiple Choice

Which of the following statements BEST describes why a decrease in reserve requirements often results in an increase in the money supply?

• A) A decrease in reserve requirements gives banks more money to better determine their interest rates.
• B) A decrease in reserve requirements gives banks more money to pay off their debts.
• C) A decrease in reserve requirements gives banks more money to lend out.
• D) A decrease in reserve requirements gives banks more money to offset lower interest rates.
• E) A decrease in reserve requirements gives banks more money to reward their employees for meritorious financial ventures.