🎓 GED Exam Prep

If the Federal Reserve decides to decrease the reserve requirement for banks, what is the most likely intended effect on the economy?

A Decrease the money supply and slow economic growth
B Increase the money supply and stimulate economic growth
C Increase interest rates on loans and mortgages
D Reduce government spending and national debt

✓ Correct Answer: Option B

Decreasing the reserve requirement means banks can lend out a larger portion of their deposits. This increases the amount of money circulating in the economy, making credit more accessible and potentially stimulating investment and economic growth.

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