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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.
Is it true that government revenues are increased because of lower tax rates? Ans) It is true to a point. The Laffer curve determines that revenues enhance as the tax rates rise
how large money is supply (M1)
Firstly, it is imperative that I investigate the stochastic properties of each series considered in the model prior to estimating the effects of oil price shocks on macroeconomic a
How is economics works with interaction of individual choices? Principles behind the interaction of individual choices: 1. There are gains through trade. • Specialization
what reasons limit the bargaining power of trade union in developing countries
what are the limitation of economies scales
Suppose that a particular large hotel has 790 rooms. Furthermore, suppose that the demand for the hotel's rooms are normally distributed with a mean demand of 733 rooms with a stan
In The No-Trade Equilibrium Stormlands: WageL = 24 WageW = ? MPLL = 4 MPLW = ? PL = ? PW = 4 Reach: Wage*L = ? Wage*W = 6 MPL*L = ? MPL*W = 1 P*L = 3 P*W = ? (a) Which
Knowing that a neoclassical, capitalist economy depends on continuous economic growth (by making its production, distribution, and consumption more efficient), what might a savvy p
1. Consider a natural monopoly. I. Show graphically and discuss how price and quantity are set by the natural monopolist. II. Define the areas corresponding to the consumers'
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