For a given amount of total reserves,a decrease in required reserves causes an increase in excess reserves.

Name: For a given amount of total reserves,a decrease in required reserves causes an increase in excess reserves.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

If required reserves decrease, banks are required to hold less money in reserve, which means they have more excess reserves to lend out. Therefore, there will be an increase in excess reserves.

For a Given Amount of Total Reserves,a Decrease in Required