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Essay text:
According to the simulation, if the rate of the DR is lower than that of the FFR, banks are more inclined to borrow from The Fed. When this happens, the supply of money in the system is increased whereas when banks borrow from other banks the supply of money is unchanged. “An increase in the discount rate discourages commercial banks from obtaining additional reserves through borrowing from Federal Reserve Banks. So the Fed may raise the discount rate when it wants to restrict the money supply,” (McConnell & Brue, p. 11).
The Required Reserve Ratio is the actual money, or cash money, that banks are required to have on hand...
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Common topics in this essay:
- Macroeconomic Impact on Business Operations
- Macroeconomic Impact on Business Operations
- Macroeconomic Impact on Business Operations
- Macroeconomic Impact On Business Operations
- Macroeconomic Impact On Business Operations
- Macroeconomic Impact On Business Operations
- Macroeconomic Impact On Business Operations
- Macroeconomic Impact on Business Operations
- Macroeconomic Impact on Business Operations
- Macroeconomic Impact on Business Operations
- Macroeconomic Impact on Business Operations
- Macroeconomic Impact on Business Operations
- Macroeconomic impact on business operations
- Macroeconomic Impact on Business Operations
- Macroeconomic Impact on Business Operations
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