Asked by
Chloe Bleck
on Dec 16, 2024
Verified
If a bank receives $2,500 of reserves by selling a government bond to the Fed,its ability to make loans increases by $2,500.
Reserve Requirement
The mandatory percentage of deposits that banks must hold in reserve, either in their vaults or at the central bank, not available for lending.
Government Bond
A debt security issued by a government to support government spending and obligations, typically offering a fixed rate of return.
- Interpret the contribution of banks to the money supply system.
- Learn about the process that leads to the enlargement or diminishment of money supply.
Verified Answer
JM
Learning Objectives
- Interpret the contribution of banks to the money supply system.
- Learn about the process that leads to the enlargement or diminishment of money supply.
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