# G demand deposits no change required reserves no

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g.Demand deposits - no changeRequired reserves - no changeExcess reserves - no changeLoans between members of the non-bank general public do not affect banks' reserves and thus do not affect their capacity to lend.h.Demand deposits - lowerRequired reserves - lowerExcess reserves - higherWhile the creation of new loans uses the banks' excess reserves and creates new money, the retiring of loans from commercial banks reduces demand deposits and restores excess reserves (i.e., increases excess reserves).i.Demand deposits - higherRequired reserves - higherExcess reserves - higherj.Demand deposits - no changeRequired reserves - no changeExcess reserves - lowerk.Demand deposits - no changeRequired reserves - higherExcess reserves - lowerQuestions j and k illustrate two major monetary tools, the reserve requirement and the discount rate. Notice that changing the discount rate and the reserve requirements do not in themselves change demand deposits. Their impact is on reserves, and the effect of this impact may lead to a change in the supply of money.l.Demand deposits - higherRequired reserves - higherExcess reserves - lowerm.Demand deposits - no changeRequired reserves - no changeExcess reserves - no changen.Demand deposits - increase
Required reserves - increaseExcess reserves - increase