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Unformatted text preview: reserves. Excessive reserves are the fed fund rate. When commercial banks make loans they create money. When loans are repaid money is destroyed unless they are immediately put back out. When commercial banks make loans they buy securities from the public because they are adding money to someone’s checking account. PG 247 requirements of types of deposits. No current requirement....
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This note was uploaded on 04/12/2008 for the course ECO 1000C taught by Professor Lawrence during the Spring '08 term at St. Johns Duplicate.
- Spring '08
- Monetary Policy