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

Question

Quizplus · Accepted Answer

Decreasing reserve requirements means banks are required to hold less money in reserve and can lend out more of their deposits. This leads to an increase in the money supply as more money is available for loans and economic activity.

When the Bank of Canada Decreases the Reserve Requirement,banks Lend