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Mnenie [13.5K]
2 years ago
9

Suppose some banks decide to increase their holdings of excess reserves relative to deposits. Ceteris paribus, this action will

put _______ pressure on the money supply, and to reduce the impact of this action the Fed could _______.
Business
1 answer:
slava [35]2 years ago
5 0

The action of the bank will put decreased pressure on the money supply, and to reduce the impact of this action, the Fed could decrease the discount rate.

Basically, a decrease in discount rate will make it easy and cheaper for commercial banks to borrow money from Federal Reserve System and thus, results to increase in available credit and lending in the economy

Therefore, if the commercial banks decide to increase their holdings of excess reserves supposed to be remitted to Feds, then, this will put <u>decreased</u> pressure on the money supply, and the Fed would act by <u>decreasing</u> the discount rate.

Read more about this here

<em>brainly.com/question/20023706</em>

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The correct answer to the following question is negligent hiring .

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