EconExperiments - Money Creation
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Central Bank | ||
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Required Reserve | ||
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Credit/Deposit/Money Creation | ||
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Students will be divided into groups of bankers, loan customers and business firms. Teacher as the Central Bank, inserts extra cash reserve (bags of pebbles) into the banking system. The loan customers borrow these extra cash reserve from banks to invest in business firms. Business firms disposit the money back into the banking system. Students experience and observe how money is created from the consolidated balance sheet of the banking system. | ||
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