An Increase in Excess Reserves Will Cause

question 52

Multiple Choice

An increase in excess reserves will cause

• A) the Fed Funds rate to rise.
• B) planned inventory investment to fall.
• C) depository institutions to lend more freely.
• D) foreign investors to buy more T-Bills.

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Definitions:

Debt To Total Assets Ratio

A financial metric indicating the proportion of a company's total assets that are financed by debt.

Times Interest Earned Ratio

A financial metric that compares a company's operating income to its interest expenses, used to evaluate its ability to meet its interest obligations.

Solvency

The ability of an entity to meet its long-term financial obligations and continue its operations indefinitely.