How does reserve requirements protect a bank

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Reference no: EM131448530

1. How does reserve requirements protect a bank? Explain why the Fed requires reserves on demand deposits but not on time deposits or savings accounts.

2. Explain the Fisher Effect. If the nominal rate on a one-year risk-free bond is 12% and the expected inflation is 8%, what is the real rate demanded by lenders?

Reference no: EM131448530

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