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  • Hey jason! question what are reserve requirements?
  • reserve requirements is the amount of money banks must keep on the reserve of the fed
  • fed decisions impact the reserve requirements
  • how do fed decisions even impact reserve requirements for banks?
  • . for banks because the fed adjusts the portion of total deposits that banks must keep in their value. .
  • hmm starting to make sense now thanks
  • Essential 4
  • i wonder what happens when the fed sets higher reserve requirements?
  • well my teacher told me higher reserve requirements equals less money in circulation
  • Yeah she gave an example
  • Fed Sets requirement at 30%
  • “A bank takes a deposit of $500- the bank must keep $150 ($500 x 30%) on reserve at the Fed. $350 is left for bank operations and lending.”
  • Shows example
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