An increase in the reserve requirements of the Federal Reserve has which of the following effects?
A) The deposit and money multipliers are reduced, accelerating the growth of credit and deposits
B) The deposit and money multipliers are reduced, slowing the growth of credit and deposits
C) The deposit and money multipliers are increased, accelerating the growth of credit and deposits
D) The deposit and money multipliers are increased, slowing the growth of credit and deposits
E) The money multiplier decreases while the deposit multiplier increases
Correct Answer:
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