To manage the economy by increasing or decreasing the amount of loans being made
Increase or decrease the money supply
To manage the economy by increasing or decreasing the amount of loans being made
If they lower the ratio, banks do not have to hold as much cash (which gains no interest), the banks will attempt to loan this money out and make money, this can stimulate investment. Increase or decrease in the money supply (APEX)
When the required reserve ratio is lowered, banks can loan out more money.
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
Increase or decrease the money supply
To manage the economy by increasing or decreasing the amount of loans being made
If they lower the ratio, banks do not have to hold as much cash (which gains no interest), the banks will attempt to loan this money out and make money, this can stimulate investment. Increase or decrease in the money supply (APEX)
By the lowering of the required reserve-level rate, banks can increase the proportion of funds they are able to lend to customers.
When the required reserve ratio is lowered, banks can loan out more money.
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
When the required reserve ratio is high, must loan out a smaller portion of their reserves, resulting in fewer loans.
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
Well, if by "the federal reserve", you mean the federal reserve bank, then there are two types of policies. These are expansionary and contractionary monetary policies. In times of recession, The FED uses expansionary policies such as increasing the money supply by buying bonds, lowering the discount rate, and lowering reserve requirements.In times of over expansion, The FED uses contractionary policies such as decreasing the money supply by selling bonds, raising the discount rate, and raising reserve requirements.
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.