Everything else held constant,an increase in the required reserve ratio will result in ________ in M1 and ________ in M2.

Question

Quizplus · Accepted Answer

An increase in the required reserve ratio means banks must hold more reserves and can lend out less, leading to a decrease in the money supply, affecting both M1 (cash and checking deposits) and M2 (M1 plus savings accounts, money market accounts, and other near money).

Everything Else Held Constant,an Increase in the Required Reserve Ratio