When the reserve requirement is increased,
A)required reserves are changed into excess reserves.
B)the excess reserves of member banks are increased.
C)a single commercial bank can no longer lend dollar-for-dollar with its excess reserves.
D)the excess reserves of member banks are reduceD.Topic: Tools of Monetary Policy

Question

Quizplus · Accepted Answer

When the reserve requirement is increased, banks must hold a larger portion of their deposits as reserves, reducing the amount of excess reserves available for lending.

When the Reserve Requirement Is Increased