If the Target Reserve Ratio in the Banking System Is

question 106

Multiple Choice

If the target reserve ratio in the banking system is 10%,there is no cash drain,and there are no excess reserves,a new deposit of $1 will lead to an eventual expansion of the money supply of

• A)$0.01.
• B)$0.10.
• C)$1.00.
• D)$10.00.
• E)$100.00.

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Definitions:

Purchase Price

This is the amount of money paid to buy a good, service, or financial asset.

Straight-Line Depreciation

A strategy for spreading out the expenditure of a tangible asset over the duration of its usefulness in uniform annual amounts.

Break-Even Lease Payment

The lease payment amount at which the cost of leasing equals the cost of purchasing the asset.

Financing Rate

The interest rate charged by lenders for borrowing money or the cost of obtaining finance.