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pantera1 [17]
3 years ago
15

7. How would an increase in the required reserve ratio affect borrowers?

History
1 answer:
jasenka [17]3 years ago
3 0
An increase in the reserve ratio would mean that the Bank has to keep more money "in reserve" against the loans it makes. 

<span>Ultimately that would mean a) there is less money available for the bank to lend b) that it would be more expensive to borrow for these reasons: </span>
<span>- scarcity of funds available </span>
<span>- the bank will pass on the cost of retaining capital as reserves </span>
<span>- it happens during times of lowered risk appetite so banks will charge more for perceived risk</span>
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