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Ch 11:Money Creation & Control
Unit 4 - Foundations of Macroeconomics
9
Economics
Undergraduate 1
01/22/2008

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Cards

Term
Balance Sheet
Definition
A statement that summarizes assets (amounts owned) and liabilities (amounts owed)
Term
Reserve Ratio
Definition
The proportion of a bank's total deposits that are held in reserves
Term
Desired Reserve Ratio
Definition
The ratio of reserves to deposits that banks wish to hold so that they are sure to have enough cash to cover withdrawals by their customers
Term
Excess Reserves
Definition

Actual reserves

minus

desired reserves

Term
Deposit Multiplier
Definition
The number by which an increase in bank reserves is multiplied to find the resulting increase in bank deposits
Term

Currency Drain

Definition
An increase in currency held outside the banks
Term
Money Multiplier
Definition
The number by which a change in the monetary base is multiplied to find the resulting change in the quantity of money
Term
Explain how banks create money by making loans
Definition
P.161
Term
Explain how the Bank of Canada influences the quantity of money
Definition
P.161
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