The <em>federal reserve </em>affects money available for banks to loan by using the<u> reserve requirement</u> tool.
<h3>What is the reserve requirement in monetary policy? </h3>
Reserve requirement is said as the set-aside funds by the commercial banks that they utilize for meeting their liabilities and instant withdrawal from customers.
Therefore, when Fed increases the rate of <em>reserve requirement</em> then banks need to hold the <u>large amount </u>which reduces their ability to loan more funds. It ultimately reduces the money supply and <em>vice-versa</em>.
Learn more about monetary policy here:
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Where are the multiple choices?
Good point things don’t make sense like this but I’m answering my first question
Answer:
AAA account balance after distribution is
0
AEP account balance after distribution is
0
Cody’s stock basis $7,500
Explanation:
AAA account
Distribution from Account
8,000 not taxable
Effect on Stock Basis
(8,000)
Balance after Distribution
0
AEP account
Distribution from Account
2,500 is not a taxable dividend and it does not tend to affect stock basis because it is from a previous C-corporation
Effect on Stock Basis
0
Balance after Distribution
0
Cody’s stock basis
Distribution from Account
4,500 not taxable
Effect on Stock Basis
(4,500)
Balance after Distribution
20,000-8,000-4,500= $7,500
