An increase in the required reserve ratio ____ excess reserves and _____ the money supply.

A) increases;decreases
B) decreases;increases
C) decreases;decreases
D) increases;increases

Required Reserve Ratio

The percentage of deposits that banks are legally required to keep on hand as reserves, not loaned out.

Excess Reserves

Excess reserves are the capital reserves held by banks beyond the required minimum, often placed with central banks, earning interest.

Money Supply

The total amount of monetary assets available in an economy at a specific time, which includes cash, coins, and balances held in checking and savings accounts.