XECO212-Money train

  

Scenario 1:

A NAFTA dispute has greatly curtailed exports from our economy. This has caused the economy to go into a downturn! Use Reserve Requirements to increase the rate of economic growth.

Choice : The Federal Reserve lowers the reserve requirement, reducing the amount of money banks are required to keep in reserve and increasing the amount of excess reserve.

In 150-200 words explain your reasoning for the way you are planning on using Reserve Requirements while addressing the following:

1. How Reserve Requirements affect the economy.

2. How your action will affect economic growth.

3. Why it is important to increase economic growth.

4. Your rationale for the use of Reserve Requirements.