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Module 25

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Banking and Money Creation - Fill-in-the-Blank (Part 1)

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Module 25Versión en línea

Banking and Money Creation - Fill-in-the-Blank (Part 1)

por Zachary Foust
1

Bank deposits are a major component of the .

Banks can depositors' money to investors because it isn't necessary for a bank to keep all of its deposits on hand .

Banks can't lend out all the funds placed in their hands by depositors because they have to satisfy any depositor who wants to his or her funds .

Currency in and bank deposits held at the Federal Reserve are called bank reserves .

Because bank reserves are not held by the public , they are not part of .

A T - account shows the assets and of a business .

Loans are from the perspective of a bank because they represent funds that those who have borrowed from the bank are expected to repay .

Deposits are because they represent funds that must ultimately be repaid to depositors .

The of bank deposits that a bank holds as reserves is its reserve ratio .

The required reserve ratio is the smallest fraction of bank deposits that a bank hold .

A occurs when a bank is unable to pay off its depositors in full .

A is a phenomenon in which many of a bank's depositors try to withdraw their funds due to fears of a bank failure .

In response to the wave of bank runs that swept across the United States in the early 1930s , the United States established a system of bank regulations that protects and prevents most bank runs .

guarantees that a bank's depositors will be paid even if the bank can't come up with the funds .

Since depostiors know their funds are even if a bank fails , they have no incentive to rush to pull them out because of a rumor that the bank is in trouble .

The Federal Reserve stands ready to money to banks through a channel known as the discount window .

A bank can turn to the Federal Reserve and the funds it needs to pay off depositors .

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