Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
reserve ratio reserve requirement fractional reserve banking system excess reserves money multiplier leakages solvency crisis Federal Reserve System Federal Open Market Committee (FOMC) federal funds rate discount rate open market operations | A formula that measures the potential or maximum amount the money supply can increase (or decrease) when a dollar of new deposits enters (exits) the system and is defined as 1 divided by the reserve requirement. The interest rate the Federal Reserve charges commercial banks and other depository institutions to borrow reserves from a regional Federal Reserve Bank. A twelve- Describes a banking system in which a portion of bank deposits are held as vault cash or in an account with the regional Federal Reserve Bank, while the rest of the deposits are loaned out to generate the money creation process. A reduction in the amount of money that is used for lending that reduces the money multiplier. It is caused by banks choosing to hold excess reserves and from individuals, businesses, and foreigners choosing to hold more cash. The required ratio of funds that commercial banks and other depository institutions must hold in reserve against deposits. The percentage of a bank’s total deposits that are held in reserves, either as cash in the vault or as deposits at the regional Federal Reserve Bank. The buying and selling of U.S. government securities, such as Treasury bills and bonds, to adjust reserves in the banking system. The central bank of the United States. A situation when a bank’s liabilities exceed its assets. The interest rate financial institutions charge each other for overnight loans used as reserves. Reserves held by banks above the legally required amount. |