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more bank lending and more money in the economy
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∙ 9y ago
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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 term indicates the percentage of banks total deposit that must be kept in its own vaults?
reserve ratio
What are the funds that banks use to satisfy the reserve requirement?
excess reserves
What is a result of high reserve requirement?
Less money in the economy.
What is the result of lowering the reserve requirement?
the mooney supply will go down because the feds do not make any money
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
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
The percentage of the bank's total deposit that it must keep in its own vaults is called the?
required reserve ratio. This ratio is set by the central bank and determines the minimum amount of reserves that a bank must hold relative to its deposits. It helps ensure the stability of the banking system and manage the money supply in the economy.
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
Are funds that the bank uses to satisfy the reserve requirement?
excess reserves
What are the funds that banks use to satisfy the reserve requirement?
excess reserves
