Principles of Macroeconomics / Unit 12 MAC 1120 short lesson, about 20 seconds
Reserve Requirements as a Tool
Captions available
The idea
Raising the required reserve ratio leaves banks less to lend and lowering it leaves more, so in principle it is a policy tool. In practice it was rarely moved, because sudden changes disrupt planning.
In practice
Unit eleven recorded the ratio at zero since March 2020.
Where people slip
So the tool exists on paper but is not in use, which matters on the exam.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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