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Reserve Requirement
The minimum fraction of customer deposits that each bank must hold as reserves, rather than lending out, as mandated by the central bank.
Simple Money Multiplier
A formula that determines the maximum amount of money that banks can create with a given level of reserves.
Excess Reserves
Banks' reserves that exceed the minimum required by the central bank, available for lending or investment.
Interest Rate
The price, expressed as a percentage of the principal, that a borrower must pay a lender for the use of funds.
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