Bank reserves are created in the process, since the Fed can \"pay\" simple by cr

Question

Bank reserves are created in the process, since the Fed can "pay" simple by crediting the amount of its purchases to the account of the bank involved in the transaction. As a result... a) what kind of a transaction is being being discussed? b) Complete this statement. Money deposited for a term is not left in bank vaults but is loanded out by the banks (subject to minimum cash reserve requirements). This means that a dollar on deposit can flow back into the banking system one or more times and that dollar can expand the money supply. a) what is meant by the minimum cash reserve requirements referred to in this clip? b) what terminology do economics use to refer to the process described in this clip?

Explanation / Answer

For part one...Transactions" money is money used as a a) store of value b) unit of account c) medium of exchange d) standard of deferred payment For part two...The money multiplier

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