If the Fed were to abolish reserve requirements,

Question

Quizplus · Accepted Answer

The Federal Reserve can influence the money supply through other tools such as open market operations, interest on reserves, and the discount rate, even without reserve requirements. The size of the money multiplier would not become infinite or 1 solely due to the abolition of reserve requirements; it depends on other factors like the currency ratio, the excess reserves banks choose to hold, and the public's demand for currency relative to deposits.

If the Fed Were to Abolish Reserve Requirements