If the Required Reserve Ratio is increased by the Fed,one could assume that the Fed is attempting to control inflation.

Question

Quizplus · Accepted Answer

When the Required Reserve Ratio is increased, banks are required to hold back more funds as reserves, which reduces the amount of money available for lending and can lead to a decrease in the money supply. This decrease can help to control inflation by reducing the amount of money circulating in the economy and decreasing the demand for goods and services, which can help to lower prices. Therefore, an increase in Required Reserve Ratio can be seen as a measure taken by the Fed to control inflation.

If the Required Reserve Ratio Is Increased by the Fed,one