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5 Cards in this Set
- Front
- Back
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Bank gets a deposit of $100 |
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bank lends out some of the cash |
90$ available to lend out now. |
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Lend out the excess reserves $90 |
-open up a line of credit for business. now the loan becomes a deposit, which gets added to the bank's liability.
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Money multiples |
deposits create loans loans create deposits more liquidity created in economy |
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limiting factor |
how much leverage is the bank willing to risk -how much cash does the bank need to cover (withdrawals) |
