Buy custom Actions Of The Government And The Increase In Prices
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This action increases deposits in the
bank, which in turn raises the banks reserves to increase. The required
reserves are increased by the amount of the check times the required reserve
ratio, and excess reserves increase by the difference between the check and the
amount of the required reserves...
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Because the excess reserves of the bank have
increased, the bank is now able to loan out more money. The bank will continue
to make new loans until it is loaned out. The lower interest rates that are
caused by the higher bond prices encourages more consumers to borrow money.
This increase in the amount of loans causes a raise in the money supply by a
multiplied effect...
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