In the Simple Deposit Expansion Model,an Expansion in Checkable Deposits

question 139

Multiple Choice

In the simple deposit expansion model,an expansion in checkable deposits of $1,000 when the required reserve ratio is equal to 20 percent implies that the Fed

• A)sold $200 in government bonds.
• B)sold $500 in government bonds.
• C)purchased $200 in government bonds.
• D)purchased $500 in government bonds.

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Definitions:

Horizontal Analysis

A method of financial analysis in which figures in financial statements over different periods are compared line by line to identify trends.

Statement of Cash Flows

A financial report that details the inflows and outflows of cash within an organization over a specific period.

Fees Earned

Fees earned is an accounting term that refers to revenue generated from providing services to clients or customers during a specific time period.

Prepaid Insurance

The portion of insurance premiums that have been paid in advance for future coverage, and is considered an asset on the balance sheet.