Unformatted text preview: community regarding the Federal Reserve’s intentions to increase or decrease the money supply. The U.S. practices what is known as “fractional reserve banking.” The reserve requirement is the percentage of some deposits that banks must keep as vault cash, or on account with the Federal Reserve at all times. If you deposit $100 into your checking account, your bank must hold a certain percentage of that deposit in reserve. The rest of your deposit may be used by the bank to make a loan for example 23 by the bank to make a loan for example....
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.
- Fall '10