Buy custom Monetary Policy And Its Affect On Macroeconomic Factors
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| Topic: |
Business
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| Number of pages / Number of words: |
5 / 1375 |
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For example when the $90 loaned by Bank A is taken out of Bank A and deposited into Bank B, the $90 deposited into Bank B is now available for lending, minus the reserve ratio, in our example 10%. Therefore, Bank B can then loan out $81. The cycle will continue until the original amount is fully loaned out...
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Therefore, Bank B can then loan out $81. The cycle will continue until the original amount is fully loaned out. The reserve ratio set by the Fed controls the amount of money that can be created. The higher the ratio the lower the expansion and the lower the ratio the higher the expansion. (McConnell and Brue, 2004, p...
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