ECON 101 Lecture : Bank Model
Document Summary
Whythe bank model financial services are important part of economy people need to understand how financial companies r products work banks participate in 2 markets whose outcomes eachother. Weil also use bank model monetary policy really works so there are feedback effects in macro to understand affect their how what do banks do take deposits pay interest. Banks earn profits on r per dollar per per dollar net re spread or year per year interest margin earn interest the ro the re operate. Revenues costs re l loan interest revenues no d resource costs of taking deposits resource costs of making loans we assume loans resource that deposits increase costs of. We think banks have large amounts that run so diminishing marginal product. Therefore we that the short fixed in think is t marginal costs of deposits mcd both of t d that are high enough.
