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BANK RESERVES: The "money" that banks use to conduct day-to-day business, including cashing checks, satisfying customers's withdrawals, and clearing checks between accounts at different banks. The "money" in question includes vault cash and Federal Reserve deposits. Specifically, vault cash is the paper money and coins that a bank keeps on the bank premises (both in the vault and in teller drawers), which is used to "cash" checks and otherwise provide the funds that customers withdraw. Federal Reserve deposits are accounts that banks keep with the Federal Reserve System, which are used to process, in a systematic, centralized fashion, the millions of checks written each day by customers of one bank that are deposited by customers of another bank. Using these deposits, the Fed acts as a central clearing house for checks, being able to simultaneously debit the account of one bank and credit the account of another. More on the importance of bank reserves can be found under fractional-reserve banking.
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SAVING The after-tax disposable income of the household sector that is not used for consumption expenditures. Saving primarily involves the use of income to purchase legal claims through financial markets rather than the direct purchase of physical goods and services (which is consumption expenditures). In the circular flow model, saving is the diversion of household income away from consumption expenditures and into the financial markets, which then flows to business investment expenditures and government purchases. Saving is one of two basic uses of disposable income. The other is consumption expenditures.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time browsing about a thrift store seeking to buy either arch supports for your shoes or an AC adapter that works with your MPG player. Be on the lookout for rusty deck screws.
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This isn't me! What am I?
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A lump of pure gold the size of a matchbox can be flattened into a sheet the size of a tennis court!
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"If you don't know where you are going, any road will get you there." -- Lewis Carroll, writer
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JIE
Journal of Industrial Economics
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