when the federal reserve increases the reserve requirement, When the Federal Reserve increases the reserve requirement. O banks will have less money they can loan out, which could cause a decrease in the money supply. O banks will have more money they can loan out, which could cause an increase in the money supply. banks will reduce their borrowing of reserves from the federal reserve and call in loans to replace those reserves, thus decreasing the money supply. O banks will increase their borrowing of reserves from the federal reserve and be willing to loan more money out, thus increasing the money supply.
when the federal reserve increases the reserve requirement, When the Federal Reserve increases the reserve requirement. O banks will have less money they can loan out, which could cause a decrease in the money supply. O banks will have more money they can loan out, which could cause an increase in the money supply. banks will reduce their borrowing of reserves from the federal reserve and call in loans to replace those reserves, thus decreasing the money supply. O banks will increase their borrowing of reserves from the federal reserve and be willing to loan more money out, thus increasing the money supply.
Chapter13: Monetary Policy
Section: Chapter Questions
Problem 8E
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Transcribed Image Text:when the federal reserve increases the reserve
requirement,
When the Federal Reserve increases the reserve requirement,
O banks will have less money they can loan out, which could cause a decrease in the money supply.
O banks will have more money they can loan out, which could cause an increase in the money supply.
banks will reduce their borrowing of reserves from the federal reserve and call in loans to replace those reserves, thus decreasing the money supply.
O banks will increase their borrowing of reserves from the federal reserve and be willing to loan more money out, thus increasing the money supply.
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