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Activity

The Case of the Gigantic $100,000 Bill

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Fractional-reserve banking is a system in which banks are required to hold only a specified fraction of their deposits (reserve requirement) available for withdrawal by depositors. The rest may be lent out, thus “creating money.” This interactive Illustrates the upper limits of the money creation process using the simple money multiplier. This interactive is for use with Lesson 22, The Case of the Gigantic $100,000 Bill, from High School Economics, 3rd edition.