Question

Suppose the federal reserve wants to decrease the money supply by $400 billion. if the reserve requirement (rr) is 0.2, calculate the change in reserves that the federal reserve must make

Answer 1

Two main modifications be made to guard the public, avoid bank bailouts, and expand banking protection and soundness.

What is the change in required reserves?

Increasing the (reserve requirement) ratios reduces the extent of deposits that can be supported with the aid of a given level of reserves and, in the absence of different actions, reduces the money stock and raises the price of credit.

What are the three dreams of the Federal Reserve?

It is the Federal Reserve's actions, as a central bank, to acquire three dreams distinct by using Congress: maximum employment, secure prices, and average long-term hobby rates in the United States.

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