The Simple Money Multiplier

question 146

Multiple Choice

The simple money multiplier:

• A)equals the reciprocal of the required reserve ratio.
• B)assumes banks hold excess reserves.
• C)becomes larger as the required reserve ratio increases.
• D)equals required reserves plus excess reserves.
• E)equals total reserves minus required reserves.

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Definitions:

Cash Dividend

A cash dividend is a payment made by a company out of its earnings to shareholders, usually in the form of cash.

Stock Dividend

A dividend payment made to shareholders in the form of additional company shares rather than cash.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to shareholders, often reinvested in the business.

Restricted

Restricted typically refers to assets or securities that are not freely tradable or accessible due to regulations or specific conditions.