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Money multiplier is a term in monetary Economics that is a phenomenon of creating money in the economy in the form of credit creation, based on the fractional reserve banking system. Money multiplier is also known as the monetary multiplier. …

Assets are the first of three major categories on the balance sheet.Current assets represent the value of all assets that can reasonably expect to be converted into cash within one year and are used to fund ongoing operations and pay current expenses. …

Current liabilities are short-term liabilities that are due within one year and include:  Accounts payable are a short-term debt owed to suppliers. Accrued expenses are expenses that have yet to be paid, but have a high probability of being paid. Non-current liabilities are …

A balance sheet should always balance. The name “balance sheet” is based on the fact that assets will equal liabilities and shareholders’ equity every time. Understanding Balance Sheets The assets on the balance sheet consist of what a company owns …

Cash Reserve Ratio (CRR) is the amount of funds that banks have to maintain with the Reserve Bank of India (RBI) at all times. If the central bank decides to increase the CRR, the amount available with the banks for disbursal …

A lender of last resort (LoR) is an institution, usually a country’s central bank, that offers loans to banks or other eligible institutions that are experiencing financial difficulty or are considered highly risky or near collapse. In the United States, …

Open Market Operations refers to buying and selling of bonds issued by the Government in the open market. This purchase and sale is entrusted to the Central bank on behalf of the Government. When RBI buys a Government bond in …

Income, or output, or profits are concepts that make sense only when a time period is specified. These are called flows because they occur in a period of time. Therefore we need to delineate a time period to get a …

A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors , usually on an overnight basis, and buys them back the following …