By Decreasing the Required Reserve Ratio,the Federal Reserve Will

question 72

Multiple Choice

By decreasing the required reserve ratio,the Federal Reserve will

• A)increase the money supply unless accompanied by a decrease in the discount rate.
• B)increase the money supply unless banks hold on to excess reserves instead of lending them.
• C)decrease the money supply by the amount of the initial change caused by the decreased required reserve ratio.
• D)decrease the money supply by a multiple of the initial change caused by the decreased required reserve ratio.

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