By requiring banks to keep more money in their vaults, the Federal Reserve Board can effectively pull money out of the economy, thereby slowing ________. Conversely, by loosening reserve requirements, the Federal Reserve Board can pump more money into the economy, which usually leads to ________ interest rates and ________ access to loans.

Question

Quizplus · Accepted Answer

By increasing reserve requirements, the Federal Reserve reduces the amount of money banks can lend, potentially slowing inflation. Lowering reserve requirements allows banks to lend more, typically resulting in lower interest rates and easier access to loans.

By Requiring Banks to Keep More Money in Their Vaults