4. Banks allow depositors immediate access to their funds, but they also lend out most of the...

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4. Banks allow depositors immediate access to their funds, but they also lend out most of the funds deposited in their care. To meet demands for cash, they maintain bank reserves composed of both currency held in vaults and deposits at the Federal Reserve. The reserve ratio is the ratio of bank reserves to bank deposits. A T-account summarizes a bank’s financial position, with loans and reserves counted as assets, and deposits counted as liabilities.

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Essentials Of Economics

ISBN: 9781429218290

2nd Edition

Authors: Paul Krugman, Robin Wells, Kathryn Graddy

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