If the desired reserve ratio decreases,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 are forced to buy fewer government securities.
E)banks' desired reserves decrease and their excess reserves do not change.

Question

Quizplus · Accepted Answer

If the desired reserve ratio decreases, banks are required to hold less reserves and therefore can lend out more of their deposits, leading to an increase in the amount of loans they are able to make.

If the Desired Reserve Ratio Decreases,then