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Answer to Question #68431 in Economics of Enterprise for Yvonne

Question #68431
What might be a result if the Federal Reserve increased reserve requirements too rapidly?
1
Expert's answer
2017-05-25T11:41:10-0400
Reserve ratio affects both resources on the federal funds market and money available for loan providing. The increase of reserve requirements will cause shortage of money supply. Such restrictive monetary policy will raise interest rate and might decrease total output in short term.

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