Reducing bank reserves would be an appropriate measure durin

Reducing bank reserves would be an appropriate measure during a recession...

a) to balance the government budget.

b) to contain strong inflationary pressures.

c) to promote an increased level of business borrowing.

d) to increase the M1 money supply

Solution

Option c is the right answer.

When bank decreases reserves at the time of recession , they are doing it so to support the companies and business. Money supply for them will be increased and people will be able to grow in there business with the support of the goverment