Students Bank and Trust has zero excess reserves.Ceteris paribus,if the required reserve ratio decreases.

Question

Quizplus · Accepted Answer

Since the bank has zero excess reserves, any decrease in the required reserve ratio will release more money for the bank to lend out. The bank will be able to make additional loans, leading to an increase in its assets and potentially increasing the money supply through the money multiplier effect. Therefore, the best choice is C.

Students Bank and Trust Has Zero Excess Reserves