Suppose that the reserve requirement for checking deposits is 20 percent and that banks do not hold any excess reserves

 Suppose that the reserve requirement for checking deposits is 20 percent and that banks do not hold any excess reserves. by $ million, and the money supply will If the Fed sells $3 million of government bonds, the economy's reserves by $ million. Now suppose the Fed lowers the reserve requirement to 15 percent, but banks choose to hold another 5 percent of deposits as excess reserves. True or False: The money multiplier will increase. True False True or False: As a result, the overall change in the money supply will decrease. True False