To decrease the money supply using the reserve requirements, what would the Fed typically do?
A) raise the reserve requirement for banks
B) reduce the reserve requirement for banks
C) make each bank voluntarily set its own reserve levels
D) let each bank get less currency from the Treasury

Question

Quizplus · Accepted Answer

To decrease the money supply, the Fed would typically raise the reserve requirement for banks. This means that banks would have to hold a larger amount of reserves, which would reduce the amount of money they can lend out, ultimately decreasing the overall money supply.

To Decrease the Money Supply Using the Reserve Requirements, What