Reference: Ref 15-2 (Table: Multiple Deposit Expansion) for the Multiple

question 74

Multiple Choice

Reference: Ref 15-2 (Table: Multiple Deposit Expansion) For the multiple deposit expansion process described in this table, what is the maximum amount of loans that the Third National Bank can make if it decides to hold 1 percent of deposits as excess reserves?

• A) $338,560
• B) $30,470.40
• C) $308,089.60
• D) $311,475.20

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Definitions:

Compounded

The process where the value of an investment increases due to the interest earned on both the principal and the accumulated interest.

Semi-annually

refers to occurrences that happen twice a year.

RRSP

Registered Retirement Savings Plan, a Canadian investment account for holding savings and investment assets, with tax advantages.

Compounded

The process of accumulating interest on an investment or loan where the earned interest is added to the principal, leading to interest being earned on interest.