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KatRina [158]
4 years ago
8

Reserves increase if the Federal Reserve

Business
1 answer:
Slav-nsk [51]4 years ago
5 0

Reserves increase if the Federal Reserve lowers the discount rate or auctions more credit.  

Option C

<u>Explanation: </u>

Unless the Federal Reserve raises liquidity, a single bank may lend its bank reserves to the degree that it produces equivalent deposits. Nevertheless, the banking sector can raise deposits multiple times.

When each bank invests and generates a loan, it reduces reserves for other banks that use it to raise its liquidity and thus create new deposits, until all existing reserves are being used.  

When it has to hold $100 as reserve balances against the investment it makes concurrently it loses reserve sums of $1,000, the most a lender can lend is $900.

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Explanation:

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So we simply multiply the contribution per unit by the increase in sale.

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6 0
4 years ago
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