Suppose the Federal Reserve wanted to reduce the money supply without using open-market operations.It could try to get the public to ________ their currency-deposit ratio and ________ banks' reserve requirements,which would in turn change the banks' reserve-deposit ratio.
A)decrease; lower
B)decrease; raise
C)increase; lower
D)increase; raise

Question

Quizplus · Accepted Answer

Increasing the currency-deposit ratio and raising banks' reserve requirements would reduce the money supply by encouraging people to hold more cash and requiring banks to hold more reserves, thus reducing the amount available for lending.

Suppose the Federal Reserve Wanted to Reduce the Money Supply