Unit 6 lesson 7 - monetary policy tools

1-

What is required reserve ratio?

- the portion of a deposite that a bank must keep on hand

2-

Why does the Fed rarely change the reserve requirment?

- it can be disruptive to the whole banking system

3-

How does the Fed encourage banks to loan mor money?

- by reducing the discount rate

4-

How does a bond sale made by the fed affect the money supply?

- The sale decreases the money supply

5-

What is the policy used most by the Fed change the money supply?

- open market operations

Question

History

Hailie Horne

30 September, 07:25

Unit 6 lesson 7 - monetary policy tools

1-

What is required reserve ratio?

- the portion of a deposite that a bank must keep on hand

2-

Why does the Fed rarely change the reserve requirment?

- it can be disruptive to the whole banking system

3-

How does the Fed encourage banks to loan mor money?

- by reducing the discount rate

4-

How does a bond sale made by the fed affect the money supply?

- The sale decreases the money supply

5-

What is the policy used most by the Fed change the money supply?

- open market operations

+1

Answers (1)

Know the Answer?

Ariella Burton · Answer 1

The answers are the following:

1. It is the portion of a deposit that a bank must keep on hand.

2. Because i t can be disruptive to the whole banking system.

3. He encouraged the bank through reducing the discount rate.

4. The sale decreases the money supply.

5. Open market operations is the policy used most by the Fed change the money supply.