Which of the following occurs when the Federal Reserve inereases the reserverequirement? Interest rates decrease Banks must hold more money in reserve Government spending increases Banks can lend more money

When the Federal Reserve increases the reserve requirement, banks must hold more money in reserve. This means that banks have less money available to lend out, which can lead to a decrease in the money supply and potentially higher interest rates. Therefore, the correct answer is:<br /><br />Banks must hold more money in reserve.