Governments can change required minimum ratio {reserve ratio}| of bank reserves to demand deposits, because money available for loans is amount over minimum percentage of demand deposits {free reserves} {excess reserves}. If amount available for loans is more, interest rate is less, and people take out more loans for higher amounts.
Social Sciences>Economics>Macroeconomics>Government Actions>Monetary Policy
6-Economics-Macroeconomics-Government Actions-Monetary Policy
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Date Modified: 2022.0224