Models of the banking system Flashcards
1
Q
What do banks do?
A
- Invest money
- Serve as intermediaries between lenders and borrowers
- Play an important role in monetary policy
2
Q
What is the reserve ratio?
A
The percent
3
Q
What are a banks liabilities?
A
-Their deposits
4
Q
What are a banks assets?
A
- Loans made
- Securities purchased
5
Q
What is the sum for the total cash in the economy?
A
Cash held by non bank public + cash held in bank reserves
6
Q
What is the money supply in an economy with the banking system
A
Cash held by non bank public + size of bank deposits
7
Q
What is the volume of bank loans decided by?
A
The intersection of the supply curve of loans and demand curve of loans
8
Q
What slope is the demand curve for loans?
A
Negative slope
