Banks and the Money Supply Flashcards

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Flashcards about Banks and the Money Supply

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7 Terms

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Bank Assets

Cash in vault (reserves), Loans made to customers, and Bonds owned by the bank

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Bank Liabilities

Checking account deposits, Other deposit accounts, and Funds borrowed from other banks

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Reserve Requirement

Minimum amount of reserves that banks must hold

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Reserve Ratio

Fraction of deposits that banks hold as reserves

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Fractional-Reserve Banking

Banks hold only a fraction of deposits as reserves

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100% Reserve Banking

All deposits are held as reserves; banks do not influence the money supply.

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Money Multiplier

The amount of money the banking system generates with each dollar of reserves.