Sunday, March 29, 2015

Video 5

         In the 5th video , they discussed about the Money Creation Process. The way banks create money is by making loans. Multiplier and multiplier desposit expansion both fall under the creating process. Reserve Ratio is the percentage of banks total requirments. The process of the multiple deposits is to add up all the potential loans. But this is only an assumption, from all the banks thats have no excess reserves.

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