If the Federal Reserve ________ the required reserve ratio,the interest rate ________.
A)lowers;rises
B)lowers;falls
C)raises;does not change
D)raises;falls
E)Not enough information is given because the effect depends also on the size of the monetary base.

Question

Quizplus · Accepted Answer

When the Federal Reserve lowers the required reserve ratio, banks can lend more of their deposits, increasing the money supply and typically leading to a decrease in interest rates.

If the Federal Reserve ________ the Required Reserve Ratio,the Interest