Table 9-6: Deposit Expansion Stages

question 118

Multiple Choice

Table 9-6: Deposit Expansion Stages
In Table 9-6, assume that banks loan out 100% of their excess banking reserves, there are no cash withdrawals, and all loan proceeds are spent. Figures have been rounded up to the nearest whole number.
-Refer to Table 9-6. What is the value of $A in stage 1?

• A) $100
• B) $200
• C) $600
• D) $800

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Definitions:

Accrued Interest

Interest that has been incurred but not yet paid, often relating to bonds or loans.

Semiannual Interest Expense

Interest expense that is due or accrued every six months on outstanding debts.

Market Rate

The prevailing price or interest rate available in the marketplace for goods, services, or securities.

Interest Method

A way of calculating interest where the amount of interest recognized over a period varies and applications could include accounting for bonds or loans.