If the Banking System Has a Required Reserve Ratio of 25

question 149

Multiple Choice

If the banking system has a required reserve ratio of 25 percent, then the money multiplier is

• A) 2.
• B) 4.
• C) 5.
• D) 10.

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Definitions:

Objective

A goal or target that is aimed to be achieved, often used in planning and strategy contexts.

Compounded Semi-Annually

Interest on an investment that is calculated twice a year and added to the principal sum, affecting the total interest earned.

Economic Equivalent

A comparison of the economic attributes of two or more investment or financial scenarios to determine their relative value or financial impact.

Missed Payment

Failure to make a required payment by its due date.