When the Required Reserve Ratio Is Increased, the Excess Reserves

question 46

Multiple Choice

When the required reserve ratio is increased, the excess reserves of 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) reduced and the multiple by which the commercial banking system can lend is reduced.

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