Money Train Multimedia Activity

Money Train Multimedia Activity - Money Train Multimedia...

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Money Train Multimedia Activity 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: The reserve requirement is a tool the Federal Reserve’s uses to control liquidity in the free market. When the Reserve banks lower the reserve requirement, it is considered an expansionary monetary policy. The reason for that is it allows more money to come into the banking system. A higher reserve requirement would allow less liquidity, and would therefore slow down economic activity. It is for that reason that gets the economy moving again. The lower the reserve the more profit a bank will make and have to lend to potential borrower. The borrower will then have more money to spend on employees and Loretta Campbell 03/20/2011
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their business. With increased economic growth, businesses will have more money and in
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Money Train Multimedia Activity - Money Train Multimedia...

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