Unit 4 - Components and Definitions

• Liabilities
• Cash Deposits from the public = DD
• Stock Shares or Owner Equity = values of the bank stocks as held by the public
• Assets 
• Required Reserve = The percentage of DD in the Vault = RR
• Excess Reserve = The remaining % of DD, used for loans = ER
• Building/Fixtures or Property = Usually a statement of the bank's property values
• Securities or Federal Bonds = Previously purchased bonds held by the bank as investments 
• Customer Loans = Previously loaned funds now owed back to the bank
• Remember: DD = RR + ER
• Bonds can move two ways 
• The Fed sells to the banks and increases the amount
• The fed buys from the banks and decreases the amount
• The Money Multiplier process created new money for the economy