Answered: What is the current reserve requirement…

What is the current reserve requirement set by the FED? What does this rate tell you about how the FED feels about the current economic situation?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter15: The Debate Over Monetary And Fiscal Policy

Section: Chapter Questions

Problem 9DQ

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Question

What is the current reserve requirement set by the FED?

What does this rate tell you about how the FED feels about the current economic situation?

Expert Solution

Step 1

The reserve ratio required in the banks set by FED is 0% for transactions up to $16.3 million, 3% for more than $16.3 million up to $124.2 million, and 10% for more than $124.2 million.

It shows the unstable economy due to reduced economic activities.

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