The Expansion of Deposits Resulting from an Injection of New

question 23

Multiple Choice

The expansion of deposits resulting from an injection of new cash to the banking system can be calculated as follows.The change in deposits is equal to

• A)the change in loans divided by the sum of the target reserve ratio.
• B)the change in reserves divided by the cash-deposit ratio.
• C)the change in reserves divided by the target reserve ratio.
• D)the change in reserves divided by the sum of the target reserve ratio and the cash-deposit ratio.
• E)the change in reserves divided by the sum of excess reserves and cash drain.

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Definitions:

Critical Thinking Skills

The ability to analyze facts, generate and organize ideas, defend opinions, make comparisons, draw inferences, and solve problems.

Declarative Knowledge

Refers to the representation of facts and information in the mind, such as the understanding that Paris is the capital of France.

Transfer of Behaviour

The application of learned skills or behaviors from one context to another, which is a key objective in training and education.

Behaviour Modelling

A training method that involves demonstrating desired behaviors and allowing learners to practice and replicate these behaviors to learn new skills.