What is achieved by having an upward adjustment in reserve requirements?
A) The money multiplier is increased, lowering inflation.
B) It reduces the stock of money that can be supported by a given amount of reserves.
C) The money multiplier is decreased.
D) Both b and c, which may help moderate inflation.

Question

Quizplus · Accepted Answer

An upward adjustment in reserve requirements reduces the stock of money that can be supported by a given amount of reserves, thereby decreasing the money multiplier. This can help moderate inflation by reducing the amount of money in circulation. Therefore, both b and c are correct.

What Is Achieved by Having an Upward Adjustment in Reserve