Why is the change in reserve requirement not frequently used to control the supply of money?
Though reserve requirement change can be very powerful tool for controlling supply of money it is seldom used. This is because a small reduction in the reserve requirement can make a huge change in the number of dollars that are in excess reserves in banks all over the country which can disrupt the whole economy. Frequent changes in the reserve requirement would also make it difficult for banks to plan.
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When foreigners purchase U.S. assets, there is an inflow of funds from abroad and this is recorded as a
A. positive item in the capital account. B. positive item in the current account. C. negative item in the capital account. D. negative item in the current account.
Recall the Application about the costs involved in opening a restaurant to answer the following question(s).Recall the Application. Because the restaurant industry is considered monopolistic competition, it is expected that in the long run, restaurant franchise owners earn
A. zero economic profits. B. positive economic profits. C. zero accounting profits. D. negative accounting profits.