Deposits Tend to Expand Whenever

question 5

Multiple Choice

Deposits tend to expand whenever:

• A) reserve requirements decrease.
• B) the public holds more cash.
• C) reserve requirements increase.
• D) monetary policy "tightens".

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Definitions:

Note

A written agreement acknowledging a debt and promising repayment.

Direct Write-off

A method of accounting for bad debts where uncollectible accounts receivable are written off directly against income at the time they are deemed nonrecoverable.

Allowance Methods

Accounting techniques used to anticipate and account for future loan losses by establishing an allowance for doubtful accounts.

Bad Debt

Money owed to a company that is unlikely to be paid by the debtor, often leading to the creditor writing it off as a loss.