If the Board of Governors of the Federal Reserve System

question 196

Multiple Choice

If the Board of Governors of the Federal Reserve System increases the legal reserve ratio, this change will

• A) increase the excess reserves of member banks and thus increase the money supply.
• B) increase the excess reserves of member banks and thus decrease the money supply.
• C) decrease the excess reserves of member banks and thus decrease the money supply.
• D) decrease the excess reserves of member banks and thus increase the money supply.

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