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SECOND ESTATE: In past centuries, this included kings, queens, dukes and others of the ruling elite. In modern times, this includes business leaders who have extensive ownership of and control over resources, especially capital, entrepreneurship, and land.
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Lesson 19: Money Creation | Unit 3: Modern Banking
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Page: 14 of 23
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The amount of checkable deposits created is a multiple of the amount of excess reserves of the banking system.- When banks makes loans, they create deposits, and create money.
When does the process stop?- Banks will create $900 of deposits, which added to the original $100 deposit, gives $1,000 of deposits that did not previously exist.
Why?- The $100 in reserves added to the first bank are used to back, in total, $1,000 of deposits.
- If banks keep 10% of deposits in reserve, then every $1 of new reserves can be used to back $10 of new deposits.
- This is the result of banks practicing fractional-reserve banking.
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BALANCE OF PAYMENTS A comprehensive set of accounts that tracks the flow of currency and other monetary assets coming in to and going out of a nation. These payments are used for international trade, foreign investments, and other financial activities. The balance of payments is divided into two accounts -- current account (which includes payments for imports, exports, services, and transfers) and capital account (which includes payments for physical and financial assets). A deficit in one account is matched by a surplus in the other account. The balance of trade is only one part of the overall balance of payments set of accounts.
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RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time searching the newspaper want ads trying to buy either arch supports for your shoes or an AC adapter that works with your MPG player. Be on the lookout for vindictive digital clocks with revenge on their minds.
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This isn't me! What am I?
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Cyrus McCormick not only invented the reaper for harvesting grain, he also invented the installment payment for selling his reaper.
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"Courage is the ladder on which all the other virtues mount." -- Claire Boothe Luce, diplomat, writer
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IBEX-35
Stock Index (Spain)
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