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dont plagerize and explain in your own words 1. How (the primary way) money is created in...

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Economics

dont plagerizeand explain in your own words

1. How (the primary way) money is created in the economy.In your explanation you must correctly apply the following terms:actual reserves,required reserves,and excessreserves.

2. Why is the banking system in the United States referredto as a fractional reserve bank system?

3. What is the role of deposit insurance in a fractionalreserve system?

Answer & Explanation Solved by verified expert
4.0 Ratings (779 Votes)
Question 1 In any modern economy commercial banks create money by giving them away as loans The banks need to hold only a proportion of their deposits as required reserves with the Federal Reserve of the country The rest of the money is referred to as excess reserves which the bank uses to generate money in the economy This is done by creating loans and checkable    See Answer
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