Money Expansion Stops When New Reserves Introduced into the Banking

question 67

Multiple Choice

Money expansion stops when new reserves introduced into the banking system have been converted into:

• A)excess reserves.
• B)securities.
• C)deposits.
• D)required reserves.
• E)loans.

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Definitions:

Systematic Risk

The inherent risk associated with the entire market or market segment, undiversifiable through portfolio diversification.

Unsystematic Risk

The risk associated with a specific company or industry, which can be mitigated through diversification of an investment portfolio.

Security Market Line

A representation in the capital asset pricing model (CAPM) showing the relationship between expected return and systematic risk.