When the Fed increases the reserve requirement, banks lend _____ of their deposits, which leads to a(n) _____ in the money supply.

Name: When the Fed increases the reserve requirement, banks lend _____ of their deposits, which leads to a(n) _____ in the money supply.
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When the Fed increases the reserve requirement, banks are required to hold more money in reserve and can lend out less of their deposits. This reduction in the amount of money that banks can lend decreases the money supply.

When the Fed Increases the Reserve Requirement, Banks Lend _____