asked 17.1k views
3 votes
The federal reserve is reluctant to change the required reserve requirments because?

asked
User Cardano
by
8.3k points

1 Answer

4 votes

Answer:

It could change money supply

Step-by-step explanation:

The federal reserve do not always change the reserve requirement because this would change the money supply in the economy which can either lead to an inflation or a deflation.

For instance, when there is a reduction in reserve requirement, it increases money supply, which can result to the increase in inflation.

answered
User Endi Zhupani
by
8.2k points
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