The Simple Deposit Multiplier Can Be Expressed as the Ratio

question 4

Multiple Choice

The simple deposit multiplier can be expressed as the ratio of the

• A)change in reserves in the banking system divided by the change in deposits.
• B)change in deposits divided by the change in reserves in the banking system.
• C)required reserve ratio divided by the change in reserves in the banking system.
• D)change in deposits divided by the required reserve ratio.

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Definitions:

APS

Acronym for Average Propensity to Save, which is the ratio of total savings to total income in an economy, indicating how much people save on average per unit of income.

Investment

Assigning financial resources in the hope of creating revenue or gains.

GDP

Stands for Gross Domestic Product, which is the total value of all goods and services produced within a country's borders in a specific time period.

Accounting Firm

A business that provides a wide range of accounting services such as audit, bookkeeping, tax preparation, and consulting to individuals and organizations.