Describe the Rules to Construct and Read a Process Map

question 40

Essay

Describe the rules to construct and read a process map.

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Definitions:

Discount Rate

The interest rate charged to commercial banks and other financial institutions for loans received from a country's central bank.

Reserve Requirement

This is a regulation set by central banks requiring banks to hold a certain percentage of deposits and notes in reserve, either in their vaults or on deposit with the central bank, as a precaution against bank runs.

Actual Reserves

The total amount of funds that a bank has in its reserve account plus any cash on hand, used to satisfy central bank requirements and handle withdrawals.

Excess Reserves

Bank reserves exceeding the reserve requirements set by the central bank, available for lending.