Demand side policy and Reserve requirements: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Add links.)
 
imported>John Grout
(Cross references and distinguish vault cash from central bank balances)
 
Line 1: Line 1:
''Economics''.   
''Banking''.   


Policy aimed at stimulating spending and hence demand for goods and services in the economy.  
The minimum ratio of vault cash and balances ("[[reserves]]") with the [[central bank]] to deposits taken by the bank that the central bank requires commercial banks to hold.  


For example an increase in government spending or a decrease in interest rates would increase demand for goods and services, causing the aggregate demand curve to move to the right.
An increase in minimum reserve requirements will be likely to lower the supply of money in the economy as banks undertake less lending, and vice versa.
 
Tends to be associated with Keynesianism.




== See also ==
== See also ==
* [[Demand]]
* [[Monetary policy]]
* [[Demand curve]]
* [[Demand side policy]]
* [[Keynesianism]]
* [[Supply curve]]
* [[Supply side policy]]
 
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Financial_products_and_markets]]

Revision as of 12:28, 3 August 2014

Banking.

The minimum ratio of vault cash and balances ("reserves") with the central bank to deposits taken by the bank that the central bank requires commercial banks to hold.

An increase in minimum reserve requirements will be likely to lower the supply of money in the economy as banks undertake less lending, and vice versa.


See also