If the desired reserve ratio increases,then
A)banks' desired reserves increase and their excess reserves decrease.
B)bank customers become more willing to make deposits in banks.
C)banks are able to make more loans.
D)banks can buy more government securities.
E)the Fed has supplied banks with more reserves.

Question

Quizplus · Accepted Answer

If the desired reserve ratio increases, banks will need to hold more reserves to meet the new requirement. This means that their desired reserves will increase, and their excess reserves (the amount of funds they have available to lend out) will decrease.

If the Desired Reserve Ratio Increases,then