The amount of reserves in the economy is often determined by the amount of money in the economy that will achieve a particular interest rate. This reflects the fact that the money supply is:

Question

Quizplus · Accepted Answer

The money supply is considered endogenous because it is determined by the demand for money which, in turn, influences the interest rate. Central banks adjust the amount of reserves in the economy to target specific interest rates, reflecting the responsive nature of the money supply to economic conditions.

The Amount of Reserves in the Economy Is Often Determined