Currency in bank vaults and bank deposits held at the Federal Reserve
BankReserves
Assets on left & liablilites on right.
T-Account
the fraction of bank deposits that a bank holds as reserves
Reserve Ratio
The smallest fraction of bank deposits that a bank must hold
Required Reserve Ratio
the banks inability to pay off depositors in full
Bank Failure
Many bank depositors try to withdraw their funds due fears of failure
Bank Run
a guarantee that depositors will be paid even if the bank can't come up with funds
Deposit Insurance
Excess of a banks assets over its bank deposits and other liabilities
Banks Capital
Rules set by the Federal Reserve that set the required reserve ratio for banks
Reserve Requirements
The ability to borrow money means a bank can avoid being forced to sell assets to pay depositors
Discount Window
On the left of a T-Account
Assets
On the right of a T-Account
Liabilities
an initial increase in real GDP leads to a rise in consumer spending
Multiplier Effect
Reserves above the amount needed to satisfy the minimum reserve ratio
Excess Reserves
the sum of currency in circulation and the reserves held by banks
monetary base
the ratio of the money supply to the monetary base
money multiplier