Which of These Is (Are) True? I

question 1

Multiple Choice

Which of these is (are) true? I. Tighter lending standards tend to increase the money multiplier, making it easier for the Fed to use its tools effectively.
II) If foreigners become less confident in the ability of the U.S. dollar to hold its value, the actual money multiplier will rise.
III) If there is a general rise in fear of the financial system, the potential money multiplier will fall.

• A) I only
• B) II only
• C) III only
• D) I, II, and III only.

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Definitions:

Investment

The allocation of resources, usually financial, in expectation of generating an income or profit.

Portfolio Expected Return

The weighted average of the expected returns of the assets in an investment portfolio.

Equal Investment

A strategy where equal amounts of capital are allocated to each investment within a portfolio.

Stocks

Shares of ownership in a company that represent a claim on part of the company's earnings and assets.