ECON 101 Lecture Notes - Lecture 1: Bild, Excess Reserves, Demand Curve
Document Summary
Roleof reserve requirements reserves remember that were talking ab t. The cb controls the quantity of reserves limiting factor on bank activities at the banks their loans deposits this is an important. How does the total quantity of reserves limit banks. When a bank takes a loan or put the deposit in reserves. 1 of deposits the bank can either make. D lt r we know that bank"s balance sheet constraint. R ya 1 limited by total reserves t. In the loan mkt this plays the role of a quantity restriction its ok for l e rc did. Agg loon mkt constans the quantity of loans t can a gang by relaying the constraint p my. Reserve requirements when d falls rc shifts the constant in the loan. Deposts also fall but this is ok bl. Reserves are teed up blot the fall in d. Soopen mkt purchases mr ads which bro bro ml md and.
