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The Maximum Money That Can Be Created by the Entire

question 95

True/False

The maximum money that can be created by the entire banking system is equal to a multiple of its excess reserves.


Definitions:

Credit Risk

Credit risk refers to the possibility that a borrower will default on a loan by failing to make the necessary payments.

Seniority

The order of repayment in the event of a sale or bankruptcy, with higher seniority debts being repaid before those of lower seniority.

Mortgage Pass-through Agency

A financial entity that aggregates mortgage loans and creates pass-through securities representing interests in those loans.

Ginnie Mae

Ginnie Mae, or the Government National Mortgage Association, guarantees timely payment of principal and interest on mortgage-backed securities.

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