Asked by
Amina Qamar
on Nov 16, 2024
Verified
In a system of 100-percent-reserve banking, changes in the money supply depend on the decisions of the Fed as well as the behavior of depositors and bankers.
100-percent-reserve Banking
A banking system in which banks are required to keep 100% of their deposits available as reserves, thus eliminating the possibility of bank runs.
Money Supply
The collective sum of money assets in an economy at a certain timeframe.
- Understand the fundamentals of fractional-reserve banking and its consequential effects on the money supply.
- Understand the historical circumstances and motivations behind the creation of the Federal Reserve System.
Verified Answer
LS
Learning Objectives
- Understand the fundamentals of fractional-reserve banking and its consequential effects on the money supply.
- Understand the historical circumstances and motivations behind the creation of the Federal Reserve System.