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October 18, 2018 

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POLITICAL FORCES: Forces in the marketing environment that are shaped by elected (and sometimes appointed) officials that impact the decisions made by a business organization. Government officials can enact laws that could cause serious harm to specific business sectors. For example, a state that passes laws prohibiting off-shore drilling would dramatically affect an oil drilling company's business outlook. Through environmental scanning a business looks at these political forces that might affect them in the short and long term.

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Lesson 19: Money Creation | Unit 4: The Multiplier Page: 17 of 23

Topic: Reserve Ratio <=PAGE BACK | PAGE NEXT=>

The key to the deposit multiplier is required reserves.

It is no coincidence that when the reserve ratio is 10%:

  • $10 of deposits require $1 of reserves and that $1 of reserves can back up $10 of deposits.
  • It's all part of the same process.
The deposit multiplier is the inverse of the reserve ratio.

The key to the deposit creation process:

  • Each bank keeps a fraction of the reserves received when checks are deposited and cleared.
  • The bank sends along the rest to another bank by making a loan.
Therefore:
  • The less banks keep, the more they send to other banks and the more is used to perpetuate the process.

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SAVING LINE

A graphical depiction of the relation between household sector saving and income. The saving line is closely related to the consumption line that forms one of the key building blocks for Keynesian economics. A saving line is characterized by vertical intercept, which indicates autonomous saving, and slope, which is the marginal propensity to save and indicates induced saving. The injections-leakages model used in Keynesian economics is based on the saving line.

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BLUE PLACIDOLA
[What's This?]

Today, you are likely to spend a great deal of time looking for a downtown retail store trying to buy either a rechargeable battery for your camera or a coffee cup commemorating the first day of spring. Be on the lookout for strangers with large satchels of used undergarments.
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This isn't me! What am I?

Paper money used by the Commonwealth of Massachusetts prior to the U.S. Revolutionary War, which was issued against the dictates of Britain, was designed by patriot and silversmith, Paul Revere.
"Executives who get there and stay suggest solutions when they present the problems. "

-- Malcolm Forbes, business executive

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Organization for Economic Co-operation and Development
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