How does the reserve requirement tool affect the ability of
deposit – type financial
institutions to create money? What are the principal
advantages and disadvantage the reserve requirement
tool?
In March of this year, the Federal Reserve lowered the reserve
requirement to zero.
What do you think of this? Explain. 2-3 sentences is plenty.
Your grade will be based on your explanation (there's not a "right"
answer).
Explain how fracking has reduced the cost of natural gas will
affect the incentives for firms to invest in research into new
renewable energy technologies if renewable electricity is a
substitute for natural gas and coal electricity but is more
expensive than either coal or natural gas right now.
You have been asked to assess the impact of possible changes in
reserve requirement components on the dollar amount of reserves
required. Assume the reserve percentages are currently set at 2
percent on the first $50 million of traction account amounts; 4
percent on the second $50 million; and 10 percent on transaction
amounts over $100 million. The First National Bank has transaction
account balances of $100 million, while the Second National Bank’s
transaction balances are $150 million and the...
If the reserve requirement is 6% and a deposit of $1200 is made
how much does the money supply grow?
If the reserve requirement is 11% and a deposit of $1200 is made
how much does the money supply grow?
Which reserve requirement would the Federal Reserve use if they
wanted to slow economic growth? Which would lead to higher interest
rates?