The Expansion of Deposits Resulting from an Injection of Cash

question 89

Multiple Choice

The expansion of deposits resulting from an injection of cash to the banking system can be calculated as follows:

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

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Definitions:

Poisson Process

A stochastic process that models the occurrence of events in fixed intervals of time or space where events occur with a constant mean rate and independently of the time since the last event.

Random Pattern

An arrangement or distribution showing no regularity or discernible order, often analyzed to understand the randomness in spatial or sequence data.

Teamwork

Collaborative effort by a group of people to achieve a common goal or complete a task in the most effective and efficient way.

Communication

The exchange of information or messages between individuals or groups, vital for collaboration and understanding in any context.