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How much money can banks create?
Does this mean that banks can create an unlimited amount of money? The answer is no - that would require them to lend an unlimited amount of money and that is not possible.
Banks use deposits to create new loans but there is an important difference between deposits and loans. When individuals deposit money in a bank, they can withdraw the money whenever they like. A bank, on the other hand, has no right to cancel a loan and get their money back whenever they like. Banks therefore need reserves so that they can deal with large withdrawals. A bank with small reserves will therefore be less inclined to lend money.
Exchange Rate Management: Following two stage devaluation of the Indian rupee in quick succession in July 1991, the government introduced Liberalized Exchange Rate System
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How can achieve mutual gain from international trade?
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Equilibrium in both the goods and in the money market If both the goods- and the money markets are to be in equilibrium... ...if P increases, Y must fal
The inverse market demand curve for a good is p = 100? 0.25Q. the inverse market supply curve for the good is p = 20 + 0.55Q. Calculate the equilibrium price and quantity, consumer
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