If the Fed lowers the reserve requirement, then this
A) increases excess reserves, encourages banks to make more loans, and increases the money supply.
B) decreases excess reserves, causes banks to reduce their loans, and decreases the money supply.
C) decreases excess reserves, causes banks to reduce their loans, and increases the money supply.
D) increases excess reserves, causes banks to reduce their loans, and increases the money supply.
Answer: A
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