When the Required Reserve Ratio Is Lowered

question 18

Multiple Choice

When the required reserve ratio is lowered,

• A) the money multiplier increases, and the amount of excess reserves increases in the banking system.
• B) the money multiplier decreases, and the amount of excess reserves increases in the banking system.
• C) the money multiplier decreases, and the amount of excess reserves decreases in the banking system.
• D) the money multiplier increases, and the amount of excess reserves decreases in the banking system.
• E) there is no change in either the money multiplier or the amount of excess reserves in the banking system.

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