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FIGURE 12- 3
-Refer to Figure 12- 3.Comparing the perfectly competitive equilibrium to the monopoly equilibrium,the deadweight loss of monopoly is given by
Reserve Requirement
A regulation that sets the minimum amount of reserves a bank must hold against deposits, used as a tool to control banking stability and money supply.
Deposits
Money placed into a financial institution for safekeeping, which can earn interest over time.
Loans
Funds borrowed that are expected to be paid back with interest.
Required Reserves
The fraction of deposits that banks are obligated to hold in reserve and not lend out, as mandated by the central bank.
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