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Reserve Requirements and Economic Growth

Banks fail when all depositors try to withdraw money at the same time. One way to prevent this problem would be to require banks to hold 100% of deposits on hand. Why would this not be a desirable thing to do? What would happen to the banking system? What would you expect to see happen to the cost of a checking account if banks could not make loans? What would happen to the amount of investment made by businesses? Explain.

 

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9210287

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