Creation of new checkable deposits and additional excess reserves. Use this to create additional credits to make even more money.
Defining reserve requirements. Amount of reserves banks must hold in vaults or cannot lend to the Fed (as a percentage of deposits) Increase in reserve requirements -> banks hold more deposits than reserves have to, and the amount available for borrowing will decrease.
The Federal Reserve is reducing the bank system's ability to print money, which tends to reduce the money supply. The higher the reserve ratio, the lower the multiplier for deposit growth.
Banks should hold more reserves so they can lend less per dollar deposited. Raise reserve ratio, lower money multiplier, lower money supply.
Learn more about Reserves at
https://brainly.com/question/25812353
#SPJ4
