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An increase in the required reserve ration will

a. increase the money supply. b. increase the money multiplier. c. decrease the money multiplier. d. decrease the discount rate

User Bombastic
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Answer: c. decrease the money multiplier.

Step-by-step explanation:

The required reserve ratio is the percentage of deposits that banks are required to keep on hand and not lend out. If this ratio increases, banks have less money to lend, which decreases the money multiplier effect (the process by which an initial deposit leads to a greater final increase in the total money supply). This does not directly affect the discount rate, which is the interest rate charged by the central bank for loans made to commercial banks.

User Thriveni
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