Table 9-6: Deposit Expansion Stages

question 60

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 $F (the total new checkable deposits) ?

• A) $1,000
• B) $4,000
• C) $5,000
• D) $6,000

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Definitions:

Purchase Supplies

The act of acquiring goods or materials used in the production process or in the day-to-day operations of a company.

Cash Recorded

The accounting entry that reflects the actual amount of cash received and recorded by a business during a specific period.

Revenue Journal

A revenue journal is a record used in accounting to keep track of the sales of goods and services that generate revenue for an entity.

Accounts Receivable

Funds that are due to a company from clients for products or services provided on credit.