Money, Banking and the central Banking system - Central Banks - central banks' tools of monetary control
3 important questions on Money, Banking and the central Banking system - Central Banks - central banks' tools of monetary control
What are the four main tools for monetary control?
- Reserve requirement
- the bank rate(or the discount rate),
- open market operations
- government deposit swtiching
What will happen to the money supply If the reserve requirement increases?
- Banks can loan out less
- which lowers the money multiplier
- decreases the money supply
1. What influences how much money the banking system can loan out with each dollar reserve
The reserve requirement
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