Which of the following accurately describes how lowering the required

reserve ratio increases the money supply?

O A. When the required reserve ratio is lowered, banks make less profit

on money loaned out.

B. When the required reserve ratio is lowered, the inflation rate goes

up and people spend less money.

C. When the required reserve ratio is lowered, banks charge lower

interest rates that make loans more affordable.

D. When the required reserve ratio is lowered, banks can loan out

more money

Question

Social Studies

Nickolas Castillo

24 April, 12:55

Which of the following accurately describes how lowering the required

reserve ratio increases the money supply?

O A. When the required reserve ratio is lowered, banks make less profit

on money loaned out.

B. When the required reserve ratio is lowered, the inflation rate goes

up and people spend less money.

C. When the required reserve ratio is lowered, banks charge lower

interest rates that make loans more affordable.

D. When the required reserve ratio is lowered, banks can loan out

more money

+2

Answers (1)

Know the Answer?

Mariyah Ayala · Answer 1

D. When the required reserve ratio is lowered, banks can loan out more money.

Explanation:

This is a concept which deals with how If the Federal Reserve decides to lower the reserve ratio for some reasons, the commercial banks around our nation are required to keep low amounts of cash at their disposal which means banks can loan out more money to consumers and businesses.