ECON 2133 Study Guide - Midterm Guide: Fractional-Reserve Banking, Bank Reserves, Monetary Base
Document Summary
Roosevelt took us off the gold standard in march 1933: fiat: has no physical backing but has value because the government says so and the people"s belief that this will be maintained b. i. Total bank reserves = required reserves + excess reserves d. ii. Total bank reserves = vault cash + deposits at federal r. bank d. iii. Required reserve: 10% of checking accounts they reserve must be kept on hand (vault cash or reserved balance at the federal reserve) d. iv. Excess reserves: keeping more money at their location than required (can be used as an insurance policy against unexpected deposit outflows) d. v. Fed controls monetary base but not the entire money supply: the fdic, created by president roosevelt during the great depression b. c. Insures people"s deposits ,000 per depositor per bank. Is the money supply the federal reserve has complete control over a. i. Monetary base = currency + bank reserves a. ii. a. iii.
