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Minimum cash reserve requirements

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Chapter 8, A3, page 182: Money deposited for a term is not left in bank vaults but is loaned out by the banks (subject to minimum cash reserve requirements). This means that a dollar on deposit can flow back into the banking system one or more times and that dollar can expand the money supply.

a) What is meant by the minimum cash reserve requirements referred to in this clip?

b) What terminology do economists use to refer to the process described in this clip?

Reference no: EM132051591

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