A Decrease in the Required Reserve Ratio

question 35

Multiple Choice

A decrease in the required reserve ratio

• A) will increase the money supply.
• B) will decrease the money supply.
• C) will not change the money supply.
• D) will decrease the discount rate.

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Definitions:

Create Money

The process by which central banks or monetary authorities increase the money supply.

Deposit Account

A deposit account is a bank account that allows the holder to deposit and withdraw money, often earning interest, including savings accounts, checking accounts, and other transaction accounts.

Liabilities

Financial obligations or debts that a company or individual owes to others, which must be paid back in the future.

Government Securities

Financial instruments issued by the government to borrow money from the public.