Assume That the Reserve Requirement Is 10% and No Excess

question 168

Multiple Choice

Assume that the reserve requirement is 10% and no excess reserves are held. If an initial cash deposit of $10,000 is made, the money supply has the potential to increase by:

• A) $11,000.
• B) $100,000.
• C) $90,000.
• D) $110,000.

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Definitions:

Negative Net Income

A financial situation where a company's total expenses exceed its revenues, leading to a loss.

Extra Money

Extra money refers to funds that are available beyond what is needed for regular expenses, savings, or immediate commitments.

Dividend Payout Ratio

A financial metric that shows what portion of a company's net income is distributed to shareholders in the form of dividends.

Tax Rate

The tax rate is the percentage at which an individual or corporation is taxed, which can vary based on income, value of goods, and other factors.