Ceteris paribus, increases in reserves will lead to which of the following?

Question

Quizplus · Accepted Answer

An increase in reserves leads to an increase in the money supply through the process of money creation. Banks are able to lend out a portion of their increase in reserves, which in turn increases the supply of money in the economy. This increased supply of money leads to a decrease in the interest rate, as borrowers are able to access more funds at a lower cost.

Ceteris Paribus, Increases in Reserves Will Lead to Which of the Following