Podcast
Questions and Answers
What is the primary purpose of a bank's cash reserve requirement?
What is the primary purpose of a bank's cash reserve requirement?
- To maximize profits by lending out as much money as possible
- To satisfy the needs of depositors' withdrawals (correct)
- To increase the interest rate on deposits
- To reduce the risk of inflation
What happens to the money when a depositor withdraws cash from their account?
What happens to the money when a depositor withdraws cash from their account?
- The bank lends out more money to make up for the loss
- The bank's cash reserve is depleted (correct)
- The bank increases its interest rates
- The bank reduces its cash reserve requirement
What is the result of the government running a budget deficit and borrowing from the South African Reserve Bank (SARB)?
What is the result of the government running a budget deficit and borrowing from the South African Reserve Bank (SARB)?
- A decrease in the money supply
- An increase in the repo rate
- A reduction in the cash reserve requirement
- An injection of cash into the banking system (correct)
What is the primary trigger for money creation in the banking system?
What is the primary trigger for money creation in the banking system?
What is the purpose of the repo rate in the banking system?
What is the purpose of the repo rate in the banking system?
What is the result of the bank lending out R90 to Mr. Smith in the money creation example?
What is the result of the bank lending out R90 to Mr. Smith in the money creation example?
What is the primary function of money in a economy?
What is the primary function of money in a economy?
What type of money has value because of the value of the material it is made of?
What type of money has value because of the value of the material it is made of?
How is money created in an economy?
How is money created in an economy?
What is the risk of using money as a store of value?
What is the risk of using money as a store of value?
What is the main characteristic of fiat money?
What is the main characteristic of fiat money?
What is the opposite of money creation?
What is the opposite of money creation?
What is the primary objective of the South African Reserve Bank?
What is the primary objective of the South African Reserve Bank?
What is the main instrument used by the South African Reserve Bank to achieve its inflation target?
What is the main instrument used by the South African Reserve Bank to achieve its inflation target?
What is the repo rate?
What is the repo rate?
What is the impact of an increase in the repo rate on the cost of credit to the public?
What is the impact of an increase in the repo rate on the cost of credit to the public?
What is the role of the Monetary Policy Committee of the South African Reserve Bank?
What is the role of the Monetary Policy Committee of the South African Reserve Bank?
What is the relationship between the repo rate and the prime overdraft rate?
What is the relationship between the repo rate and the prime overdraft rate?
