Question

if the board of governors of the federal reserve system increases the legal reserve ratio this change will

Answer 1

If the board of governors of the federal reserve system increases the legal reserve ratio this change will "reduce member banks' surplus reserves to reduce the amount of money in circulation."

What is federal reserve system?

The American central bank is referred to as the Federal Reserve System (FRS). It is conceivably the most potent financial organization in the entire globe and is sometimes referred to as "the Fed."

Some characteristics of federal reserve system are-

• The United States' central bank & monetary authority is the Federal Reserve System.
• The Fed offers a secure, adaptable, and stable financial and monetary system to the nation.
• The 12 district Federal Reserve Banks which make up the Reserve System are each in charge of a particular part of the country.
• The Fed's primary responsibilities include overseeing and regulating banks, implementing national monetary policy, preserving financial stability, and offering banking services.
• The Fed's monetary policy is decided through the Federal Open Market Committee, which also controls the nation's money supply.

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