Which list contains only actions that decrease the money supply?
A) lowering the bank rate; raising the reserve requirement ratio
B) lowering the bank rate; lowering the reserve requirement ratio
C) raising the bank rate; raising the reserve requirement ratio
D) raising the bank rate; lowering the reserve requirement ratio

Question

Quizplus · Accepted Answer

Raising the bank rate makes borrowing more expensive, which can reduce the amount of money banks lend out. Raising the reserve requirement ratio means banks must hold a larger fraction of deposits as reserves, reducing the amount available for lending. Both actions can decrease the money supply.

Which List Contains Only Actions That Decrease the Money Supply