The Greater the Desired Reserve Ratio, The

question 52

Multiple Choice

The greater the desired reserve ratio, the:

• A)higher is the income multiplier.
• B)lower is the income multiplier.
• C)lower is the monetary multiplier.
• D)higher is the monetary multiplier.

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Definitions:

Money Markets

The section of the financial market in which financial instruments with high liquidity and very short maturities are traded, serving the need for short-term borrowing or lending.

T-Bills

Short-term government securities issued at a discount from the face value and maturing at par, typically used as a low-risk investment.

Money Market

A financial market for debt securities with maturities of less than 1 year (short term). The New York money market is the world’s largest.

Debt Securities

Financial instruments representing a loan made by an investor to a borrower, typically corporate or governmental.