When the reserve ratio is increased: a. Required reserves are changedinto excess

Question

When the reserve ratio is increased:



a. Required reserves are changedinto excess reserves.

b. The excess reserves ofmember banks are increased.

c. A single commercial bankcan no longer lend dollar-for-dollar with its excess reserves.

d. The excess reserves ofmember banks are reduced. Which of the following would reduce the money supply:



a. Commercial banks use excessreserves to buy government bonds from the public.

b. Commercial banks loan outexcess reserves.

c. Commercial banks sellgovernment bonds to the public

d. A check clears from BankA to Bank B. When the reserve ratio is increased:



a. Required reserves are changedinto excess reserves.

b. The excess reserves ofmember banks are increased.

c. A single commercial bankcan no longer lend dollar-for-dollar with its excess reserves.

d. The excess reserves ofmember banks are reduced. Which of the following would reduce the money supply:



a. Commercial banks use excessreserves to buy government bonds from the public.

b. Commercial banks loan outexcess reserves.

c. Commercial banks sellgovernment bonds to the public

d. A check clears from BankA to Bank B.

Explanation / Answer

1. D The excess reserves of member banks are reduced.

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