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Consider a Policy That Increases the Required Reserve Ratio in Countries

Question 138

Multiple Choice

Consider a policy that increases the required reserve ratio in countries such as the United States.What type of policy is this?  


A)  It is a contractionary policy because it lowers the amount of total reserves in the banking system. 
B)  It is a contractionary policy because it lowers the amount of excess reserves in the banking system. 
C)  It is an expansionary policy because it raises the amount of total reserves in the banking system. 
D)  It is an expansionary policy because it raises the amount of excess reserves in the banking system.

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