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more bank lending and more money in the economy
It protects public deposits.
Reserve requirement
the percentage of a bank's total deposits that must be kept in its possession
reserve ratio
more bank lending and more money in the economy
Less money in the economy.
the mooney supply will go down because the feds do not make any money
will discourage aggregate demand.
It protects public deposits.
Increasing the reserve requirement for banks will make less money available to borrowers and thus slow the economy's growth.
Reserve requirement
the percentage of a bank's total deposits that must be kept in its possession
Money Multiplier is inverse of Reserve Requirement. That is, m = 1/R
reserve ratio
Reserve requirement.
excess reserves