Suppose that the reserve requirement for checking deposit is 10 percent and that banks do not hold any excess reserve
Posted: Sun May 29, 2022 6:45 pm
Suppose that the reserve requirement for checking
deposit is 10 percent and that banks do not hold any excess
reserves
Now, suppose BNM lower the reserve requirement to 5
percent, but banks choose to hold another 5 percent of deposits as
excess reserves. Why might banks do so? What is the overall
change in the money multiplier and the money supply as
a result of these
actions?
deposit is 10 percent and that banks do not hold any excess
reserves
Now, suppose BNM lower the reserve requirement to 5
percent, but banks choose to hold another 5 percent of deposits as
excess reserves. Why might banks do so? What is the overall
change in the money multiplier and the money supply as
a result of these
actions?