Suppose the Fed Increases Required Reserves from 10% to 20

question 65

Multiple Choice

Suppose the Fed increases required reserves from 10% to 20% of deposits. Assuming that banks are fully loaned-up, the money supply will _____ and the value of the money multiplier will _____ to _____.

• A) rise; fall; 10
• B) fall; rise; 2
• C) rise; rise; 4
• D) fall; fall; 5

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