By decreasing the required reserve ratio,the Federal Reserve will

A) increase the money supply unless accompanied by a decrease in the discount rate.
B) increase the money supply unless banks hold on to excess reserves instead of lending them.
C) decrease the money supply by the amount of the initial change caused by the decreased required reserve ratio.
D) decrease the money supply by a multiple of the initial change caused by the decreased required reserve ratio.

Required Reserve Ratio

The fraction of deposits that regulators require a bank to hold in reserve and not loan out, in order to ensure bank liquidity.

Money Supply

The comprehensive sum of all money available in an economy, counting cash, coins, and figures in checking and savings accounts, at a precise time.

Federal Reserve

The central bank of the United States, responsible for setting monetary policy, regulating banks, and ensuring the stability of the financial system.