First National Bank has zero excess reserves.Ceteris paribus,if the required reserve ratio increases,which of the following will happen immediately?

Question

Quizplus · Accepted Answer

If the required reserve ratio increases, the bank will be required to hold more reserves, but since it has zero excess reserves, it will not have enough required reserves to meet the new requirement. This could lead to a forced reduction in lending or borrowing further from other banks.

First National Bank Has Zero Excess Reserves