Answer:
the money supply decreases
Step-by-step explanation:
Reserve ratio is the percentage of deposits that is required of commercial banks to keep as reserves. The higher the ratio, the lower the money supply
For example, assume reserve ratio is initially 8% of deposits. It is later reduced to 10%. 1000 is deposited
Increase in money supply = deposit / reserve ratio
1000 / 0.08 = 12,500
1000 / 0.1 = 10,000
It can be seen the money supply decreased when reserve ratio was increased from 8% to 10%