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What does it mean to have ample reserves? Who holds these reserves and what do they use these reserves for? How are ample reserves different

  1. What does it mean to have ample reserves? Who holds these reserves and what do they use these reserves for?
  2. How are ample reserves different from the reserves held by member banks at the FED before 2008?
  3. What is the zero lower bound and how did this constrain monetary policy from impacting the economy?
  4. When the FED increases the interest rate on reserves held at the FED, what is the impact on the economy and businesses/consumers?
  5. When the FED decreases the interest rate on reserves held at the FED, what is the impact on the economy and businesses/consumers?

Many people complained that the FED helps Wall Street and not mainstreet. As a result the FED also changed it's policies to have more impact in the economy. The FED now has more influence over various interest rates. They can target the term (long term mortgages) or they can target specific instruments (mortgages, student loans, consumer credit).

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