When the Required Reserve Ratio Is Decreased, the Excess Reserves

question 326

Multiple Choice

When the required reserve ratio is decreased, the excess reserves of member banks are

• A)reduced, but the multiple by which the commercial banking system can lend is unaffected.
• B)reduced and the multiple by which the commercial banking system can lend is increased.
• C)increased and the multiple by which the commercial banking system can lend is increased.
• D)increased and the multiple by which the commercial banking system can lend is reduced.

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