Vocabulary Help for the Reserve Requirement, Deposit Expansion, and Bank Balance Sheet Quiz

1. If a question just mentions reserves. It means Actual or 1. If a question just mentions reserves. It means Actual or Total Reserves. 2. If the Reserve Requirement is mentioned, it is aka Reserve Ratio or Required Reserve Ratio. 3. If a question mentions the maximum increase in the money supply or “ultimate increase in the money supply, it is referring to how much the money supply can increase throughout the entire banking system. As such, you use the Money Multiplier (aka Deposit Expansion Multiplier) 4. Actual Reserves aka Total Reserves. 5. If a question mentions “a bank can safely lend out” it is referring to excess reserves. The only cash a bank may lend out. 6. If a questions mentions “a bank must have” it is referring to required reserves. The cash banks may not lend out.