A Lower Reserve Requirement

question 146

Multiple Choice

A lower reserve requirement

• A) increases the ability of banks to make loans.
• B) further limits deposit creation.
• C) lowers the money multiplier.
• D) restricts the borrowing capability of borrowers.

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Definitions:

Par Value

The face value of a bond or stock, as specified by the issuing company, which is the minimum price at which the securities can be issued initially.

Retirement

The process of removing an asset from service after its useful life has ended, often involving its disposal or sale.

Gain or Loss

The financial result from a transaction that leads to an increase (gain) or decrease (loss) in the asset value of a company.

Straight-line Amortization

A method of evenly spreading out the cost of an intangible asset over its useful life.