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NET WORTH: The difference between a firm's assets and liabilities, which is the value of a company's assets after deducting liabilities. With assets being what a company owns and liabilities what a company owes, net worth can be thought of as what the company owes to the owners. Net worth is also a measure of wealth.
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Lesson 19: Money Creation | Unit 3: Modern Banking
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Page: 11 of 23
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Suppose you find a $100 bill that you deposit in Amos National Bank.- Amos National adds $100 of vault cash, or reserves, to its assets, and $100 to its liabilities, your account.
- Some of these reserves are required ($10) and some are excess ($90), which can be used for a loan.
- Amos National Bank adds $90 to the customer's checking account, so the customer can buy new tires.
Two changes:- Amos National has a $90 loan balanced by a $90 checkable deposit.
- Amos National Bank just created $90 of money.
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COMMON-PROPERTY GOODS Goods characterized by rival consumption and the inability to exclude nonpayers. Common-property goods are one of four types of goods differentiated by consumption rivalry and nonpayer excludability. The other three goods are private (rival consumption and nonpayers can be excluded), public (nonrival consumption and nonpayers cannot be excluded), and near-public (nonrival consumption and nonpayers can be excluded). Nonrival consumption and the ease of excluding of nonpayers means common-property goods cannot be efficiently exchanged through markets and are often overconsumed.
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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway looking to buy either several magazines on fashion design or a package of 3 by 5 index cards, the ones without lines. Be on the lookout for letters from the Internal Revenue Service.
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Approximately three-fourths of the U.S. paper currency in circular contains traces of cocaine.
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"Perhaps the most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not; it is the first lesson that ought to be learned; and however early a man's training begins, it is probably the last lesson that he learns thoroughly. " -- Thomas H. Huxley, Scientist
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