The Simple Deposit Multiplier Can Be Expressed as the Ratio

question 6

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) desired reserve ratio divided by the change in reserves in the banking system
• D) change in deposits divided by the desired reserve ratio

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Definitions:

Ceteris Paribus

A Latin term meaning "all other things being equal," used in economics to analyze the effect of one variable on another while holding all other factors constant.

Demand Curve

It represents the relationship between the price of a good or service and the quantity demanded by consumers over a certain period of time.

Quantity Demanded

Refers to the total amount of a good or service that consumers are willing and able to purchase at a specific price.

Price

The amount of funds needed to purchase a commodity, service, or asset.