Depository Institutions Create Money When They Lend or Invest Excess

question 46

True/False

Depository institutions create money when they lend or invest excess reserves.

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Definitions:

Futures Contract

A standardized legal agreement to buy or sell a specific commodity or financial instrument at a predetermined price at a specified time in the future.

Market Value

The current price at which an asset or service can be bought or sold.

Gross Profit

The financial gain made after subtracting the cost of goods sold from revenue, indicating the efficiency of a company in managing its production and labor costs.

Fair Value Hedge

A hedge of the exposure to changes in fair value of a recognized asset or liability or an identified portion of such an asset or liability that is attributable to a particular risk.