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Filice_A_XECO_MoneyTrain_6 - Anthony Filice XECO 212 Yvonne...

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Anthony Filice October 23, 2011 XECO 212 Yvonne Shivers Assignment: 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: Reserve requirements affect the economy by changing the amount of money that the banking industry keeps in reserves. By increasing the amount of reserve money, the banks can loan out less money, slowing the amount of money that is put into the economy and ultimately stabilizing an economy that is rising too fast. By doing the opposite and lowering reserve amounts, the banks can loan more money to boost a down economy.
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