Question

In March of this year, the Federal Reserve lowered the reserve requirement to zero.

What do you think of this? Explain. 2-3 sentences is plenty. Your grade will be based on your explanation (there's not a "right" answer).

Answer 1

We know that due to covid 19 the economic activities is very slow and economy is slow down and due to this federal decide to reserve requirements to zero.

Now reserve requirement is the minimum amount of reserve that must be held by a commercial bank.If the reserve requirement is zero then commercial bank has more money to lend out which means that money supply will increases and if money supply increases then demand is created and so production increases and output increases which leads to economy growth.