109) in principle, a reduction in the discount rate would be expected to increase bank borrowing of reserves thus increasing the monetary base and the money supply decrease bank borrowing of reserves, thus decreasing the monetary base and the money supply cause the reserve.deposit ratio lo fall, thus decreasing the money multiplier and the money supply raise the reserve deposit ratio, thus decreasing the monetary base and increasing the money supply 109) in principle, a reduction in the discount rate would be expected to increase bank borrowing of reserves thus increasing the monetary base and the money supply decrease bank borrowing of reserves, thus decreasing the monetary base and the money supply cause the reserve.deposit ratio lo fall, thus decreasing the money multiplier and the money supply raise the reserve deposit ratio, thus decreasing the monetary base and increasing the money supply