Question

Raising the reserve ratio __________ the ability of banks to create money (make loans) and decreases a bank’s ability to make a profit..

Answer 1

Lowers

Step-by-step explanation:

Required reserve ratio refers to the portion of deposits with banks that will be kept with central banks. If there is an increase in the required reserve ratio then the banks have to keep more amount of deposits with the central bank which reduces the bank's ability to give loans and create money.

Because with an increase in the reserve ratio, the less amount of deposits available with the banks for giving loans.