Changes

==The Reserve Ratio==

==The Reserve Ratio==

The '''reserve ratio''' is the ratio of money deposited in a bank that the bank is required to keep on hand. This amount of reserves is to ensure that banks can meet withdrawal demand and also prevents banks from becoming too leveraged.

The '''[[reserve ratio]]''' is the ratio of money deposited in a bank that the bank is required to keep on hand. This amount of reserves is to ensure that banks can meet withdrawal demand and also prevents banks from becoming too leveraged.

==The Discount Rate==

==The Discount Rate==

The '''discount rate''' is the rate at which the Federal Reserve Bank will lend money to individual banks. The Fed is a lender of last resort and banks generally meet reserve shortfalls by borrowing from other banks; borrowing from the Fed can be seen as a bellwether of insolvency.

The '''[[discount rate]]''' is the rate at which the Federal Reserve Bank will lend money to individual banks. The Fed is a lender of last resort and banks generally meet reserve shortfalls by borrowing from other banks; borrowing from the Fed can be seen as a bellwether of insolvency.

==Open-Market Operations==

==Open-Market Operations==

The Fed's open-market committee can buy or sell Treasury Bonds to cause money to flow toward or away from the government.

The Fed's open-market committee can buy or sell Treasury Bonds to cause money to flow toward or away from the government. These sales or purchases are known as [[open-market operations]].

==Sources==

==Sources==