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Money Train Multimedia Activity

Money Train Multimedia Activity - Scenario 1 In 150 to 200...

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Scenario 1 In 150 to 200 words, explain your reasoning for the way you are planning on using Reserve Requirements. Be sure to address the following: 1. How Reserve Requirements affect the economy 2. How your action will affect economic growth 3. Why it is important to increase economic growth 4. Your rationale for the use of Reserve Requirements At the end of the game, you will be provided with this information to give to your instructor. Answer: Reserve requirements help to maintain a stable banking system and ensure that banks are able to conduct day-to-day check-clearing and cash-withdrawal transactions. An increase in the money supply can be achieved when the Federal Reserve lowers reserve requirements. A decrease in the money supply can be achieved when the Federal Reserve raises reserve requirements. However, in practice, reserve requirements are not very flexible used only in extreme circumstances as a tool of monetary policy. Their most important role is to provide structure and stability to the banking system. Consumers can benefit from consuming more
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