________ mean lower monetary multipliers and therefore less creation of new checkable- deposit money via loans (and vice versa)
New cards
2
Monetary multiplier
________- Exists because the reserves and deposits lost by one bank become reserves of another bank.
New cards
3
Wahoo
Receiving cash as checkable deposits constitute claims that the depositors have against the assets of the ________ bank and thus are a new liability account.
New cards
4
Reserve ratio
________- The "specified percentage "of checkable- deposit liabilities that a commercial bank must keep as reserves.
New cards
5
excess reserves
A single commercial bank in a multibank banking system can lend only an amount equal to its initial pre- loan ________.
New cards
6
Balance sheet
________- A statement of assets and claims on assets that summarizes the financial position of the bank at a certain time.
New cards
7
commercial bank
When a(n) ________ buys government bonds from the public, new money is created.
New cards
8
Currency itself
________ serves as bank reserves so that the creation of checkable deposit money by banks (via their lending) is limited by the amount of currency reserves that the banks feel obligated, or are required by law, to keep.
New cards
9
federal reserve bank
Transaction 4: Depositing reserves in a(n) ________.
New cards
10
Deposit insurance
________ helps to prevent economic panics.
New cards
11
Federal funds rate
________- Interest paid on banks lending excess reserves to other banks on an overnight basis.
New cards
12
Fractional reserve banking system
Only a portion (fraction) of checkable deposits are backed up by cash in bank vaults or deposits at the central bank
New cards
13
Balance sheet
A statement of assets and claims on assets that summarizes the financial position of the bank at a certain time
New cards
14
Transaction 1
Creating a bank
New cards
15
Vault cash
Cash held by a bank
New cards
16
Transaction 2
Acquiring property + equipment
New cards
17
Transaction 3
Accepting deposits
New cards
18
Transaction 4
Depositing reserves in a federal reserve bank
New cards
19
Required reserves
An amount of funds equal to a specified percentage of the banks own deposit liabilities
New cards
20
Reserve ratio
The "specified percentage" of checkable-deposit liabilities that a commercial bank must keep as reserves
New cards
21
Transaction 5
Clearing a check drawn against the bank
New cards
22
Transaction 6
Granting a loan
New cards
23
Transaction 7
Buying government securities
New cards
24
The selling of government bonds to the public by a commercial bank-like the repayment of a loan
reduces the supply of money
New cards
25
Federal funds rate
Interest paid on banks lending excess reserves to other banks on an overnight basis
New cards
26
Monetary multiplier
Exists because the reserves and deposits lost by one bank become reserves of another bank
New cards
27
Fractional reserve banking system
Only a portion (fraction) of checkable deposits are backed up by cash in bank vaults or deposits at the central bank
New cards
28
Balance sheet
A statement of assets and claims on assets that summarizes the financial position of the bank at a certain time
New cards
29
Vault cash
Cash held by a bank
New cards
30
Required reserves
An amount of funds equal to a specified percentage of the bank’s own deposit liabilities
New cards
31
Reserve ratio
The “specified percentage” of checkable-deposit liabilities that a commercial bank must keep as reserves
New cards
32
Excess reserves
Actual reserves - required reserves
New cards
33
Federal funds rate
Interest paid on banks lending excess reserves to other banks on an overnight basis
New cards
34
Monetary multiplier
Exists because the reserves and deposits lost by one bank become reserves of another bank. It magnifies excess reserves into a larger creation of checkable-deposit money.
Studied by 4 people
