(Table) Consider the T-Account in the Table A) the Potential Money Multiplier and the Actual Money Multiplier

question 49

Multiple Choice

(Table) Consider the T-account in the table. If the reserve requirement is 20%, then: $$\begin{array} { | l | l | } \hline \text { Assets } & \text { Liabilities } \\\hline \$ 28,000 \text { (cash) } & \begin{array} { l } \$ 5,000 \text { (checking account } \\\text { balances) }\end{array} \\\hline \$ 42,000 \text { (loans) } & \$ 20,000 \text { (loan recipients' checking } \\& \text { account balances) }\\\hline \end{array}$$

• A) the potential money multiplier and the actual money multiplier are the same.
• B) the potential money multiplier is 50% larger than the actual money multiplier.
• C) the potential money multiplier is 20% smaller than the actual money multiplier.
• D) the actual money multiplier is 5.

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