Asked by Skylar Nicholson on May 18, 2024
Verified
The Federal Reserve can alter the size of the money supply by changing reserves or changing reserve requirements.
Reserve Requirements
Regulations set by central banks determining the minimum amount of reserves that banks must hold against deposits, used to control the money supply.
- Comprehend the means and procedures the Federal Reserve deploys to sway the volume of money in circulation and the processes within banking establishments.
- Perceive the impact of reserve requirements on the banking system and the general money supply.
Verified Answer
GN
Gabby NicolMay 24, 2024
Final Answer :
True
Explanation :
The Federal Reserve can influence the size of the money supply by adjusting reserve requirements (the percentage of deposits that banks must hold in reserve) or by altering the amount of reserves in the banking system through open market operations and other tools.
Learning Objectives
- Comprehend the means and procedures the Federal Reserve deploys to sway the volume of money in circulation and the processes within banking establishments.
- Perceive the impact of reserve requirements on the banking system and the general money supply.
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