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LIMITED RESOURCES: Finite quantities of labor, capital, land, and entrepreneurship available to an economy for the production of goods and services. This is one half of the fundamental problem of scarcity that has plagued humanity since the beginning of time. The other half of the scarcity problem is unlimited wants and needs.
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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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AVERAGE COST The opportunity cost incurred per unit of good produced. This is calculated by dividing the cost of production by the quantity of output produced. While average cost is a general term relating cost and the quantity of output, three specific average cost terms are average total cost, average variable cost, and average fixed cost. A related cost term is marginal cost.
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YELLOW CHIPPEROON
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Today, you are likely to spend a great deal of time at a dollar discount store looking to buy either a remote controlled World War I bi-plane or a wall poster commemorating Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki. Be on the lookout for infected paper cuts.
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Sixty percent of big-firm executives said the cover letter is as important or more important than the resume itself when you're looking for a new job
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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