Question

If the Fed raised the reserve requirement, the demand for reserves would

a. increase, so the federal funds rate would fall.
b. increase, so the federal funds rate would rise.
c. decrease, so the federal funds rate would fall.
d. decrease, so the federal funds rate would rise

Answer 1

b. increase, so the federal funds rate would rise.

Step-by-step explanation:

When reserve requirement is raised then more money is to be kept in reserves. it causes in the increase in the demand of reserves. Further, the increase in demand of reserves pushes the federal fund rate on a higher side and it also rises.