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Topic: Book Reports
Number of pages / Number of words: 7 / 1712
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270). Buying of bonds from commercial banks or the public increases the reserves of the commercial banks. The increase reserve of commercial banks increases their ability to lend to the public and thus increases the nation’s supply of money. Selling of securities on the other hand reduces commercial bank’s reserve, and thus reduces the nation’s money supply (McConnel-Brue, 2004)...


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Selling of securities on the other hand reduces commercial bank’s reserve, and thus reduces the nation’s money supply (McConnel-Brue, 2004).

Reserve Ratio is the amount of funds that a depository institution must hold in reserve against specified deposit liabilities. Within limits specified by the law, the Board of Governors has the sole authority over changes in reserve requirements...


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