What are excess cash reserves

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Reference no: EM13737196

Although the central banker didn't say so, this may ultimately compel him to resort increasingly to managing the money supply by managing banks' excess cash reserves-the stuff from which banks create loans.

a. What are excess cash reserves?

b. Why are they called "the stuff from which banks create loans"?

c. How would the central bank manage these excess reserves?

(Make sure you explain your response)

Reference no: EM13737196

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