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ADAM SMITH: A Scottish professor (born 1723, died 1790) who is considered the father of modern economics for his revolutionary book, entitled An Inquiry into the Nature and Causes of the Wealth of Nations published in 1776.

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Lesson 19: Money Creation | Unit 3: Modern Banking Page: 15 of 23

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  • That modern banks practice fractional-reserve banking, which is the key to money creation.
  • That any reserves over those required to meet a given percentage are called excess reserves, which are used by banks to make loans, increase checkable deposits, and create money.
  • That when a bank receives a deposit, two things happen: the bank adds to vault cash, or reserves, and it adds to its liabilities, the customer's account.
  • That when a check is cleared reserves are transferred from one bank to another.
  • That when banks makes loans, they create deposits, and create money.
  • That the amount of checkable deposits created is a multiple of the amount of excess reserves obtained by the banking system.

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VALUE IN USE

The satisfaction of wants and needs provided by the direct consumption of goods and services. Acquiring value from the use of goods and services is really the ultimate goal of economic activity. It is the final step in the production, allocation, and consumption activities that are undertaken to address the fundamental problem of scarcity. Value in use should be contrasted with the similar phrase, value in exchange.

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Today, you are likely to spend a great deal of time surfing the Internet trying to buy either a set of luggage without wheels or a how-to book on wine tasting. Be on the lookout for telephone calls from long-lost relatives.
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More money is spent on gardening than on any other hobby.
"The greatest things ever done on Earth have been done little by little. "

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