In a Fractional-Reserve Banking System,an Increase in Reserve Requirements

question 122

Multiple Choice

In a fractional-reserve banking system,an increase in reserve requirements

• A)increases both the money multiplier and the money supply.
• B)decreases both the money multiplier and the money supply.
• C)increases the money multiplier,but decreases the money supply.
• D)decreases the money multiplier,but increases the money supply.

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Definitions:

Times Interest Earned

is a financial ratio that compares a company's income before interest and taxes (EBIT) to its interest expenses, indicating how well the company can cover its interest obligations.

Debt-To-Equity Ratio

A formula displaying the relative use of debt and equity from shareholders in the financial strategy for a company's assets.

Average Collection Period

calculates the average number of days it takes for a business to receive payments from its customers for invoices issued.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.