If the Fed Increases the Required Reserve Ratio at a Time

question 221

Multiple Choice

If the Fed increases the required reserve ratio at a time when banks are holding excess reserves,

• A)it forces banks to increase the money supply
• B)it forces banks to decrease the money supply
• C)it makes it possible for banks to increase the money supply but does not force them to do so
• D)the money supply will not increase as much as if the Fed left the reserve ratio alone
• E)it is conducting open market operations but not changing the money supply

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