Money, Banking and the central Banking system - the meaning of money - what banks do
4 important questions on Money, Banking and the central Banking system - the meaning of money - what banks do
What is a bank? And what does it do?
it uses liquid assets on the form of bank deposits to finance the illiquid investments of borrowers.
Can banks create liquidity (money)? How?
because it doesn't keep all the funds deposited with it in the form of highly liquid assets , but lends out that money so there is more currency in circulation, in the form of loans and mortgages
this can only happen if there is not bank runs
What is the tool that we use in determining the money supply? And does that tool do?
- A T-account
- it is used to analyze a banks financial position, and summarizes its financial position by showing, in a single table, the business's assets on the left, and liabilities, equity on the right.
- Higher grades + faster learning
- Never study anything twice
- 100% sure, 100% understanding
What 2 consequences does running out of cash have?
Bank Run
The question on the page originate from the summary of the following study material:
- A unique study and practice tool
- Never study anything twice again
- Get the grades you hope for
- 100% sure, 100% understanding