You should complete this assignment while you are in class today to avoid homework. I am at Challenge Day in the gym all day today. Chapter 14 is a difficult and tedious chapter to read, so please try to focus on the specific topics I have highlighted and not get lost in the banking transactions.
1. Compare early banking (the goldsmiths) to modern banking (fractional reserve banking).
2. Define/describe each:
a. Required Reserves
b. Excess Reserves
c. Total Reserves
3. What is the Reserve Requirement (also called the required reserve ratio)? Why was it created and by whom?
4. Define:
a. asset
b. liability
5. Create a list of banking transactions which count as assets and liabilities for a bank.
6. What is the money multiplier? Describe it in general terms and provide a formula.
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