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If the required reserve ratio were 0 percent then money supply expansion would be infinite Why don't we want an infinite growth of the money supply?
Wiki User
∙ 11y ago
P = MV/Q; so if V, velocity of money in final expenditures, and Q, the real value of final expenditures, remain relatively constant, then an infinite growth of money supply will lead to massive inflation.
Wiki User
∙ 11y ago
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Which would create the most money?
the initial deposit is $6500 and the required reserve ratio is 20 percent
What is Reserve requirement ratio?
The Required Reserve Ratio is the percentage/fraction of required reserves that should be held for every dollar of deposits in a depository institution that is required by the Federal Reserve.
What describes how lowering the required reserve ratio reduces the money supply?
When the required reserve ratio is lowered, banks can loan out more money.
What is the structure of reserve requirements?
As of October 2005, the structure of reserve requirements was 0 percent for all checkable deposits up to $7 million (the exemption), 3 percent for such deposits from above $7 million to $47.6 million (the low-reserve tranche),
Why is raising the required reserve ratio results in a decrease in the money supply?
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
If the money multiplier is 4, what is the required reserve ratio (RRR)?
25 percent
Would the money supply increase or decrease if the required reserve ratio was lowered from 20 percent to 10 percent?
That would be decrease
Which would create the most money?
the initial deposit is $6500 and the required reserve ratio is 20 percent
What is Reserve requirement ratio?
The Required Reserve Ratio is the percentage/fraction of required reserves that should be held for every dollar of deposits in a depository institution that is required by the Federal Reserve.
Under a fractional reserve banking system the amount of money loaned out can only increase if what happens?
The required reserve ratio is lowered.
What describes how lowering the required reserve ratio reduces the money supply?
When the required reserve ratio is lowered, banks can loan out more money.
What accurately describes how raising the required reserve reserve ratio reduces the money supply?
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
What investment must a Fed member bank make?
A member bank is required to purchase stock from its Reserve Bank in an amount equal to 3 percent of its combined capital and surplus.
What percent of the Total Force is the Reserve Component?
50%
What percentage is the statutory reserve for the banking companies?
20 percent
What is the structure of reserve requirements?
As of October 2005, the structure of reserve requirements was 0 percent for all checkable deposits up to $7 million (the exemption), 3 percent for such deposits from above $7 million to $47.6 million (the low-reserve tranche),
What level of srp readiness is required for Reserve Component soldiers that are mobilized for active duty?
Level 1 of SRP readiness is required for Reserve Component soldiers that are mobilized for active duty.
