{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

eco202_note04 - Macroeconomics Theory and Policy Supply of...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Macroeconomics Theory and Policy Masoud Anjomshoa 1 Masoud Anjomshoa 1 Supply of Money Masoud Anjomshoa 2 Supply of Money: Reserves ( R ): The portion of deposits that banks have not lent. A bank liabilities include deposits. A bank assets include reserves and outstanding loans. 100-percent-reserve banking : A system in which banks hold all deposits as reserves. Fractional-reserve banking: A system in which banks hold a fraction of their deposits as reserves. In fractional-reserve banking systems, banks create money, but they don’t create wealth: Bank loans give borrowers some new money and an equal amount of new debt.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon