Bank deposit and credit creation, Managerial Economics

Assignment Help:

Bank Deposit

Bank notes and coins together constitute the currency in circulation.  But they form only a part of the total money supply.  The larger part of the money supply in circulation today consists of bank deposits.  Bank deposits can either be a current account or deposit account.  These are created by commercial banks and the process is called credit creation.

Credit Creation

The ability of banks to create deposit money depends on the fact that bank deposits need to be only fractionally backed by notes and coins.  Because the bank does not need to keep 100 per cent reserves, it can use some of the money deposited to purchase income-yielding investments.


Related Discussions:- Bank deposit and credit creation

Relationship TR, Explain in brief the relationship between TR,AR and MR und...

Explain in brief the relationship between TR,AR and MR under perfect market condition.

#title.total revenue, if Q=120-2p is the equation for demand curve, find th...

if Q=120-2p is the equation for demand curve, find the compounding total, marginal and average revenue function

Explain the confidence interval, 1.  According to an article in San Luis Ob...

1.  According to an article in San Luis Obispo Tribune July 21, 2006 37% of the college freshman and 48% of the college seniors carry a credit balance from month to month. Suppose

Advertising budget, Analyse The Method By Which a Firm Can Allocate The Giv...

Analyse The Method By Which a Firm Can Allocate The Given Advertising Budget Between Different Media Of Advertisement

Discounting principle, Using the discounting principle calculate the presen...

Using the discounting principle calculate the present value of an annuity of five years at Rs. 500 payments made at the end of each of the next five years at 10% interest. stion..

Managerial Economics Homework Help-Present Value, Suppose that, in their di...

Suppose that, in their divorce settlement, Ashton Kutcher offers Demi Moore $16 million spread evenly over 8 years (with the 1st payment upfront and the 2nd payment at the end of y

What do you mean by ordinal utility, Q. What do you mean by Ordinal utility...

Q. What do you mean by Ordinal utility? A method of analysing utility or satisfaction derived from consumption of services andgoods, based on a relative ranking of services and

Effectiveness of trade unions in developing countries, Effectiveness of Tra...

Effectiveness of Trade Unions in Developing Countries Trade Unions in developing countries tend to be less effective in their wage negotiations with employers than their count

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd