Principles of Macroeconomics / Unit 12 MAC 1122 short lesson, about 20 seconds
From Limited to Ample Reserves
Captions available
The idea
The three traditional tools assume reserves are scarce, so adding or draining them moves lending. Reserves stopped being scarce: they grew from about fifteen billion dollars in 2007 to 2.7 trillion by late 2014.
In practice
In 2019 the committee stated it would operate with ample reserves.
Where people slip
The model did not become wrong. The conditions it assumed stopped holding.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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