Watch Jonathan Jarvis’ 2009 video The crisis of credit visualized and answer the following questions: Did individuals with poor credit rating make smart choices for themselves with no down payment and interest only mortgage payments when they bought high-priced homes prior to the Great Recession? Why or why not?  Based on the video, discuss if the miracle of markets worked or failed to work to produce positive macroeconomic outcome.

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Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.