Which of the Following Is an Outcome of a Decrease

question 83

Multiple Choice

Which of the following is an outcome of a decrease in the reserve requirement ratio?

• A)DIs must hold more reserves against the transaction accounts on their balance sheets.
• B)DIs are able to lend a smaller percentage of their deposits.
• C)Decreased credit availability in the economy.
• D)A multiple contraction in deposits and a decrease in the money supply.
• E)A multiplier effect on the supply of DI deposits and thus, the money supply.

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Definitions:

Accounts Payable

A liability account on the balance sheet representing money owed by a company to its creditors or suppliers for purchases made on credit.

Credit Column

The section of an accounting record where increases in liabilities, revenues, and equity accounts are recorded.

Debit Column

The Debit Column is the left-hand side of an account record in double-entry bookkeeping, used to record increases in asset, expense, and loss accounts, and decreases in liability, equity, and revenue accounts.

General Journal

A primary accounting record used to document all financial transactions in chronological order.