Multiple Choice
Which of the following is an outcome of a decrease in the reserve requirement ratio?
A) DIs must hold more reserves against the transaction accounts on their balance sheets.
B) DIs are able to lend a smaller percentage of their deposits.
C) Decreased credit availability in the economy.
D) A multiple contraction in deposits and a decrease in the money supply.
E) A multiplier effect on the supply of DI deposits and thus, the money supply.
Correct Answer:
Verified
Correct Answer:
Verified
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