Lowering reserve requirements / decreasing the volume of reserves
The correct answer is "Lowering reserve requirements / increasing volume of reserves." When a central bank lowers reserve requirements, banks are allowed to hold less money in reserve and can lend more, which increases the money supply. Additionally, increasing the volume of reserves means banks have more funds available to lend, further boosting deposits. This mechanism is part of the monetary policy tools used to influence economic activity. For instance, during the 2008 financial crisis, the Federal Reserve lowered reserve requirements to stimulate lending and economic growth.
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