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What is the purpose the reserve requirement?
It protects public deposits.
Why did the Members banks must leave this with the Fed?
Reserve requirement
In reference to federal reserve policy what are reserve requirement?
the percentage of a bank's total deposits that must be kept in its possession
What will increased consumer spending?
Consumer spending is called consumption, which is a component of Aggregate Demand in our economy. In monetary policy, the Federal Reserve can buy treasuries, lower the reserve requirement, and lower the discount rate which will increase consumption. In fiscal policy, the government can cut taxes to increase consumer spending.
What term indicates the percentage of banks total deposit that must be kept in its own vaults?
reserve ratio
What is the purpose the reserve requirement?
It protects public deposits.
Decreasing the reserve requirement will?
will discourage aggregate demand.
How can the reserve requirement for banks be used to slow the economys growth?
Increasing the reserve requirement for banks will make less money available to borrowers and thus slow the economy's growth.
Why did the Members banks must leave this with the Fed?
Reserve requirement
What is a result of high reserve requirement?
Less money in the economy.
In reference to federal reserve policy what are reserve requirement?
the percentage of a bank's total deposits that must be kept in its possession
What will increased consumer spending?
Consumer spending is called consumption, which is a component of Aggregate Demand in our economy. In monetary policy, the Federal Reserve can buy treasuries, lower the reserve requirement, and lower the discount rate which will increase consumption. In fiscal policy, the government can cut taxes to increase consumer spending.
What is the relationship between the monetary multiplier and reserve ratios?
Money Multiplier is inverse of Reserve Requirement. That is, m = 1/R
What term indicates the percentage of banks total deposit that must be kept in its own vaults?
reserve ratio
What term indicates the percentage of a banks total deposit that must be kept in its own vaults?
Reserve requirement.
What are the funds that banks use to satisfy the reserve requirement?
excess reserves
Are funds that the bank uses to satisfy the reserve requirement?
excess reserves
