Asked by Bianca Junio on May 25, 2024
Verified
An increase in the reserve requirement increases reserves and decreases the money supply.
Reserve Requirement
The minimum amount of reserves that banks must hold against deposits, as mandated by central banking authorities.
Money Supply
The all-encompassing amount of economic monetary assets at a designated time.
- Apprehend the influence of reserve requirements on the banking system and total money supply.
- Fathom the consequences of changes in the money supply on the economy's behavior.
Verified Answer
MS
Mochiko SueyoshiMay 28, 2024
Final Answer :
False
Explanation :
An increase in the reserve requirement decreases the amount of funds banks can lend out, effectively reducing the money supply, not increasing reserves.
Learning Objectives
- Apprehend the influence of reserve requirements on the banking system and total money supply.
- Fathom the consequences of changes in the money supply on the economy's behavior.