If the monetary authorities want to reduce chartered bank lending they should:
A)take actions to reduce chartered bank reserves.
B)take actions to increase chartered bank reserves.
C)ask the chartered banks to lower the desired reserve ratio.
D)do none of the above.

Question

Quizplus · Accepted Answer

If the monetary authorities want to reduce chartered bank lending, they would want to decrease the bank's ability to lend money. Chartered bank reserves represent the amount of money that a bank can lend out, so by reducing the reserves, the bank's ability to lend is constrained. Therefore, the authorities should take actions to reduce chartered bank reserves.

If the Monetary Authorities Want to Reduce Chartered Bank Lending