When the reserve requirement is decreased, the excess reserves of member banks are Multiple Choice O reduced, but the multiple by which the commercial banking system can lend is, unaffected. reduced and the multiple by which the commercial banking system can lend is increased.

When the reserve requirement is decreased, the excess reserves of member banks are Multiple Choice O reduced, but the multiple by which the commercial banking system can lend is, unaffected. reduced and the multiple by which the commercial banking system can lend is increased.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.3P

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Question

When the reserve requirement is decreased, the excess reserves of member banks are
Multiple Choice
O reduced, but the multiple by which the commercial banking system can lend is unaffected.
O reduced and the multiple by which the commercial banking system can lend is increased.
O
increased and the multiple by which the commercial banking system can lend is increased.
increased and the multiple by which the commercial banking system can lend is reduced.

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