The Banking System Has Just Experienced an Increase in Deposits

question 420

Multiple Choice

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent. What does the money multiplier equal?

• A) 4.00
• B) 3.33
• C) 0.25
• D) 10.00

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Definitions:

Confidence Interval

Values range, derived from statistical samples, that possibly includes the value of an elusive population parameter.

Population Mean

The average value of a set of characteristics within a full population, calculated by summing all the values and dividing by the number of observations.

Sample Mean

The average value of all the observations in a sample, calculated as the sum of the observations divided by the number of observations in the sample.

Confidence Interval

It expresses the degree of uncertainty or certainty in a sampling method, represented as a range within which an estimated parameter is expected to lie.