A decrease in ________ increases the money supply since it causes the ________ to rise.
A)reserve requirements;monetary base
B)reserve requirements;money multiplier
C)margin requirements;monetary base
D)margin requirements;money multiplier

Question

Quizplus · Accepted Answer

A decrease in reserve requirements lowers the amount of funds that banks must hold in reserve, which increases the money multiplier. This is because banks can lend out a greater portion of their deposits, thereby increasing the money supply through the creation of new deposits.

A Decrease in ________ Increases the Money Supply Since It