A reduction in the required reserve ratio would cause the interest rates to

A) increase only if the level of investment is low relative to historic levels.
B) decrease.
C) increase.
D) increase only if the level of unemployment is high.
E) remain the same.

Required Reserve Ratio

The fraction of deposits that banks are required to hold in reserve and not lend out, determined by the central bank.

Interest Rates

The cost of borrowing money or the return on investing, typically expressed as a percentage of the principal, and set by central banks or determined by the market.