the money supply decreases when the fed sells treasury bonds. the smaller the reserve requirement, the larger the decrease will be

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21-04-2022
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the money supply decreases when the fed sells treasury bonds. the smaller the reserve requirement, the larger the decrease will be

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ewomazinoade ewomazinoade · Answer 1 · 2022-04-27T11:43:11+02:00

The smaller the reserve requirement, the larger the decrease will be in required reserves.

What is the reserve requirement?

The reserve requirement is the percentage of consumer's deposits that are kept as reserves with the Central Bank. The reserve requirement is determined by the reserve ratio.

When the Fed sells treasury bonds, money supply decreases. This is known as a contractionary monetary policy.

To learn more about reserve requirement, please check: https://brainly.com/question/25812353