User: If the Federal Reserve increases the required reserves, financial institutions will likely lend out

Note: ... Federal Reserve ... increases the amount of bank reserves required, banks are forced to take money out of the economy. If it lowers the reserve rate, banks can lend ... financial ... [www.ehow.com/way_5252285_monetary-policy-making.html]
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Weegy: If the Federal Reserve increases reserves, a single bank can make loans up to the amount of its excess reserves, creating an equal amount of deposits. The banking system, however, can create a multiple expansion of deposits. [ As each bank lends and creates a deposit, it loses reserves to other banks, which use them to increase their loans and thus create new deposits, until all excess reserves are used up. .............. www.econlib.org/library/Enc/MoneySupply.html ]
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