Money, Banking and the central Banking system - Central Banks - central banks' tools of monetary control

3 important questions on Money, Banking and the central Banking system - Central Banks - central banks' tools of monetary control

What are the four main tools for monetary control?

  • Reserve requirement
  • the bank rate(or the discount rate),
  • open market operations
  • government deposit swtiching  

What will happen to the money supply If the reserve requirement increases?

  • Banks can loan out less
  • which lowers the money multiplier
  • decreases the money supply 

1. What influences how much money the banking system can loan out with each dollar reserve

The reserve requirement

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