If the Reserve Ratio Is 100-Percent,then a New Deposit of $1000

question 51

Multiple Choice

If the reserve ratio is 100-percent,then a new deposit of $1000 into a bank account

• A)eventually increases the money supply by $1000.
• B)leaves the size of the money supply unchanged.
• C)eventually decreases the size of the money supply by $1000.
• D)eventually increases the money supply by $2000.

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Definitions:

Stock C

A generic term that could refer to a third class of stock; however, without specific context, its meaning can vary.

Arbitrage Pricing Theory

A theory that designs to predict the price of assets by considering the relationship between a financial asset's returns and the macroeconomic factors that directly affect it.

Expected Return

The anticipated value or profit generated by an investment over a given period, factoring in all potential outcomes and their probabilities.

Systematic Risk

The danger that affects all investments within an entire market or a specific sector, commonly referred to as market risk or non-diversifiable risk.