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Decrease in reserve requirements

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What effects are decreases in reserve requirements likely to have on (a) bank reserves, (b) Federal Funds rates, (c) bank lending, (d) Treasury bill rates, and (e) the bank prime rate? Explain your answers.

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The solution explains what effects are decreases in reserve requirements likely to have on (a) bank reserves, (b) Federal Funds rates, (c) bank lending, (d) Treasury bill rates, and (e) the bank prime rate.

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What effects are decreases in reserve requirements likely to have on:

a. bank reserves --------------> None
b. Federal funds rates---------> Reduce the dederal fund rate
c. bank lending-----------------> Increase bank lending
d. ...

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Edwin Sinclar, MBA
Education
  • MBA, Aspen University
  • Bachelor of Science , Berea College
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