When the Fed increases the required reserve ratio,a bank's
A) required reserves are unaffected.
B) required reserves are increased.
C) required reserves are decreased.
D) excess reserves are decreased.
E) b and d

Question

Quizplus · Accepted Answer

When the Federal Reserve increases the required reserve ratio, banks are required to hold a larger fraction of their deposits as reserves, directly increasing their required reserves (B). This action also decreases the amount of funds banks have available to lend out, effectively reducing their excess reserves (D).

When the Fed Increases the Required Reserve Ratio,a Bank's