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July 13, 2025 

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LAW OF DEMAND: The inverse relationship between demand price and the quantity demanded, ceteris paribus. This fundamental economic principle indicates that as the price of a commodity decreases, then the quantity of the commodity that buyers are able and willing to purchase in a given period of time, if other factors are held constant, increases. This law is incredibly important to the study of economics. If you compiled a top ten list of economically important laws, the law of demand would be right there at the top.

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FRACTIONAL-RESERVE BANKING: A system in which banks keep less than 100 percent of their deposits in the form of bank reserves and use the rest for interest-paying loans. Banks in the good old U. S. of A., as well as those in most other modern countries, practice this system of fractional-reserve banking.

     See also | bank | bank reserves | money supply | money creation | bank panic | Federal Reserve System | Federal Deposit Insurance Corporation | Great Depression | reserves | vault cash | Federal Reserve deposits |


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COEFFICIENT OF ELASTICITY

A numerical measure of the relative response of one variable to changes in another variable. The coefficient of elasticity is used to quantify the concept of elasticity, including price elasticity of demand, price elasticity of supply, income elasticity of demand, and cross elasticity of demand. The coefficient can be calculated using the simple endpoint or midpoint formulas or with more sophisticated calculus and logarithmic techniques.

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