Which statement describes how borrowers will most likely benefit when the Fed reduces reserve requirements? Loan requirements will likely be relaxed. Interest rates will likely decrease. Housing prices will likely decrease. Investment opportunities will likely improve.

The correct answer is B) Interest rates will likely decrease.

The statement that describes how borrowers will most likely benefit when the Fed reduces reserve requirements is "Interest rates will likely decrease."

The severe requirements of the Federal Reserve of the United States are the funds or the cash that the banks must have in balance with the deposits made by their clients. These severe requirements are part of the monetary policies established by the Fed. The other two parts are the discount rate and open market operations. when the Fed reduces reserve requirements, banks can have less cash available and can give more loans to people that need them.

Interest rates will likely decrease. This is because when the Federal Reserve reduces the reserve requirements banks can have access to more money. Reserves are basically money that the bank has to keep rather than lend out. This expansionary monetary policy increases the money supply, whenever the money supply increases the interest rates are lowered. You can think about the interest rates as the price of money; when the supply of a good increases its price tends to decrease. An expansionary monetary policy, benefits borrowers because this means that the price of a loan will decrease. However, it is important to keep in mind that an expansionary monetary policy is often accompanied by inflation.