If Banks Are Fully Loaned Up, Have No Excess Reserves

question 72

Multiple Choice

If banks are fully loaned up, have no excess reserves, and the required reserve ratio is raised, the amount that banks can lend is:

• A) reduced and the money supply contracts.
• B) reduced and the money supply expands.
• C) reduced and there is no change in the money supply.
• D) increased and the money supply expands.
• E) increased and the money supply contracts.