Ask Question
BusinessBusiness
13 May, 14:53

What is the relationship between changes in the money supply and changes in the reserve requirement

+2
Answers (1)
  1. 13 May, 15:20
    0
    Reserve requirements have an indirect relationship with the money supply

    Explanation:

    Reserve requirements are a portion of customer deposits a bank is supposed to keep in its custody at all times. The federal reserve gives guidance on the proposition of reserve requirement that a bank should hold. Reserve requirement is usually a percentage of the deposits. Banks cannot loan out their reserves.

    Reserve requirements have an inverse relationship with the money supply in the economy. If the reserve requirement is high, banks will have a lower proposition of customer deposits to loan out. When reserve requirement is low, banks will have a bigger proposition of deposits to loan out, thereby increasing the money supply in the economy.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “What is the relationship between changes in the money supply and changes in the reserve requirement ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
During a company's first year, the asset account, Office Supplies, was debited for $3,900 for the purchases of supplies. At year-end, office supplies on hand were counted and determined to be $1,625.
Answers (1)
The ability to start and grow icontact was primarily based on the existence of the internet. the internet is considered a key part of the
Answers (1)
Problem 3-38 (LO 3-2, LO 3-3) Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $31,000 bill from her accountant for consulting services related to her small business.
Answers (1)
Sal used a building in his business that cost $200,000. In September Year 1, Sal sold the building to Benno for $100,000 cash. Benno also agreed to assume Sal's $150,000 mortgage and pay Sal's $5,000 accrued real estate taxes.
Answers (1)
Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write-off this account, Dalton should debit A.
Answers (1)
New Questions in Business
Suppose your company sells goods for $340, of which $220 is received in cash and $120 is on account. The goods cost your company $133 and were paid for in a previous period.
Answers (1)
On November 1, Jovel Company loaned another company $170,000 at a 12.0% interest rate. The note receivable plus interest will not be collected until March 1 of the following year. The company's annual accounting period ends on December 31.
Answers (1)
A major challenge in designing marketing communications is being able to grab the attention of the target audience in a crowded media field. Which of the following factor (s) contribute to creating this challenge? A. Fragmentation of mass mediaB.
Answers (1)
What advertising technique focuses on the positive and ignores any negative aspects in the product? Glittering Generalities Weasel Words Endorsements Card Stacking
Answers (1)
The single recovery principle requires a court to settle a matter once and for all by awarding a lump sum for past and future expenses. a. True b. False
Answers (1)
Home » Business » What is the relationship between changes in the money supply and changes in the reserve requirement
Sign Up Forgot Password?