When the Fed increases the reserve requirement,it
A) decreases the money supply.
B) increases the money supply.
C) increases the amount of insurance for accounts.
D) clears all of the checks in the system immediately.
E) reduces the percentage of deposits that banks must hold in reserve.

Question

Quizplus · Accepted Answer

If the Fed increases the reserve requirement,then banks would make fewer loans,the money supply would decline,and economic activity would slow down.

When the Fed Increases the Reserve Requirement,it