Question

The Federal Reserve has RAISED the Reserve Requirement. Select the economic impacts this will likely have. (Select 5)

Decreased inflation.
Increased unemployment.
The economy will experience faster growth.
Decreased unemployment.
Banks will be more reluctant to approve loans.
Banks will be less reluctant to approve loans.
The economy will experience slower growth.
The money supply will be increased.
Increased inflation.
The money supply will be decreased.

Answer 1

Increasing the reserve requirement means that banks are required to hold a larger portion of their deposits as reserves, which means they have less money available to lend out. As a result, the following economic impacts are likely:

1. Banks will be more reluctant to approve loans
2. The money supply will be decreased
3. The economy will experience slower growth
4. Increased unemployment
5. Decreased inflation (since the money supply is decreased, there will be less money available to buy goods and services, which can lead to lower prices)

Step-by-step explanation: