How do changes in reserve ratio affect the availability of credit ?
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ΔIncreasing the (reserve requirement) ratios reduces the volume of deposits that can be supported by a given level of reserves and, in the absence of other actions, reduces the money stock and raises the cost of creditΔ
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Explanation:
ΔIncreasing the (reserve requirement) ratios reduces the volume of deposits that can be supported by a given level of reserves and, in the absence of other actions, reduces the money stock and raises the cost of creditΔ
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