An increase in excess reserves will ________ interest rates, leading to households and businesses to borrow ________.
A) decrease; less
B) decrease; more
C) increase; less
D) increase; more

Question

Quizplus · Accepted Answer

An increase in excess reserves in banks typically leads to lower interest rates because banks have more funds available to lend. Lower interest rates make borrowing cheaper, encouraging households and businesses to borrow more.

An Increase in Excess Reserves Will ________ Interest Rates, Leading