If the Federal Reserve Reduced Its Reserve Requirement from 6

Multiple Choice

If the Federal Reserve reduced its reserve requirement from 6.5 percent to 5 percent, and banks held no excess reserves, this policy would:

A) increase both the money multiplier and the money supply.
B) increase the money multiplier but decrease the money supply.
C) decrease the money multiplier but increase the money supply.
D) decrease both the money multiplier and the money supply.