Asked by Tarun Rajpurohit on Apr 27, 2024
Verified
Raising the reserve requirement tends to increase the supply of money,thereby lowering interest rates.
Reserve Requirement
This is the minimum amount of funds that a bank must hold in reserve against deposits made by customers, a requirement set by the central bank.
Interest Rates
The cost of borrowing money or the return on invested capital, usually expressed as a percentage.
- Perceive the effects of the Federal Reserve's decisions on the circulation of money and the levels of interest rates.
Verified Answer
MM
Manav MehtaApr 29, 2024
Final Answer :
False
Explanation :
Raising the reserve requirement reduces the amount of funds banks have available to lend, which decreases the supply of money and tends to increase interest rates.
Learning Objectives
- Perceive the effects of the Federal Reserve's decisions on the circulation of money and the levels of interest rates.
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