Suppose the Fed Increases Required Reserves from 10% to 20

Multiple Choice

Suppose the Fed increases required reserves from 10% to 20% of deposits. Assuming that banks are fully loaned-up, the money supply will _____ and the value of the money multiplier will _____ to _____.

A) rise; fall; 10
B) fall; rise; 2
C) rise; rise; 4
D) fall; fall; 5