Question

For a given level of the monetary base, an increase in the required reserve ratio on checkable deposits will mean an increase in the money supply. an increase in checkable deposits. an increase in discount borrowing. a decrease in the money supply.

Answer 1

Answer:

a decrease in the money supply.

Explanation:

In the case when the reserve ratio is higher so the checkable deposits amount is also higher as there is a positive relation between the reserve rato and the checkable deposit also the bank needs to set aside it rather than lending so the lending capacity of the bank would also decline due to this there is a decrease in the money supply