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Topic: Business
Number of pages / Number of words: 2 / 446
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(2006). Economics principles & tools. 4th ed. Upper Saddle River, NJ: Pearson Prentice Hall.

Wikipedia. (2005). Monetary Policy. Retrieved on December 10, 2005, from http://en.wikipedia.org/wiki/Monetary_policy


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Monetary policy can be implemented by changing the proportion of total assets that banks must hold in reserve with the central bank. Banks only maintain a small portion of their assets as cash available for immediate withdrawal. The rest is invested in illiquid assets, such as mortgages and loans. By changing the proportion of total assets to be held as liquid cash, the Federal Reserve changes the availability of funds that can be loaned...


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