Which Statement Does NOT Explain Why the Actual Money Multiplier

question 258

Multiple Choice

Which statement does NOT explain why the actual money multiplier and the potential money multiplier are different?

• A) Banks hold excess reserves during tough economic times.
• B) The interest rate that banks pay on deposits is very low.
• C) Foreign deposits in American banks are not counted in the actual money multiplier.
• D) Foreign consumers, businesses, and governments hold U.S. dollars.

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Definitions:

Expected Claims

An estimation of the amount and frequency of claims a company might expect within a certain period, often used in insurance and risk management.

Marginal Utility

is the additional satisfaction or utility a consumer receives from consuming an additional unit of a good or service.

Income

The money received by an individual or business for work, from investments, or from other sources.

Families

Groups of individuals related by blood, marriage, or other significant relationships who typically live together and share economic and social responsibilities.