Table 9-6: Deposit Expansion Stages

question 154

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 $G (the total new required reserves) ?

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

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Definitions:

Compounded Semi-Annually

Interest calculation method where interest is added to the principal balance twice a year, leading to exponential growth of the investment.

Monthly Deposits

Regular payments or contributions made into an account every month.

Quarterly Deposits

Deposits made into an account or investment at regular intervals every three months.

Compounded Semi-Annually

A method of calculating interest in which the accrued interest is added to the principal sum biannually, leading to "interest on interest."