An increase in the required reserve ratio would be
A) a restrictive policy because it lowers the amount of total reserves in the banking system.
B) a restrictive policy because it lowers the amount of excess reserves in the banking system.
C) an expansionary policy because it raises the amount of total reserves in the banking system.
D) an expansionary policy because it raises the amount of excess reserves in the banking system.
E) an expansionary policy because it raises the amount of required reserves in the banking system.

Question

Quizplus · Accepted Answer

An increase in the required reserve ratio means banks must hold more reserves and have less available to lend, reducing excess reserves and restricting the money supply.

An Increase in the Required Reserve Ratio Would Be