Assuming All Excess Reserves Are Loaned Out, If the Reserve

question 43

Multiple Choice

Assuming all excess reserves are loaned out, if the reserve ratio is 25 percent, the money multiplier will be equal to

• A) 0.5.
• B) 2.5.
• C) 4.
• D) 5.

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Definitions:

Work Sheet

A document used by accountants to prepare adjusting entries and to draft a company's financial statements.

Accounting Cycle

The accounting cycle is a step-by-step process of recording, classifying, and summarizing financial transactions of a business to provide an accurate picture of its financial position and performance.

Adjusting Entries

Documentation in accounting made at the termination of an accounting cycle to allot income and spending to the span in which they factually occurred.

Debit Total

The sum of all debit entries made in an account or ledger over a specific period.