What Is the Value of the Deposit Multiplier in a 100-Percent

question 202

Multiple Choice

What is the value of the deposit multiplier in a 100-percent reserve banking system?

• A) 0.
• B) 1
• C) a value between 0 and 1
• D) a value greater than 1

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Definitions:

Tax Liability

The total amount of tax that an individual, corporation, or other entity is legally obligated to pay to an authority as the result of the occurrence of a taxable event.

Target Capital Structure

The ideal mix of debt, preferred equity, and common equity that a firm aims to achieve to minimize cost of capital.

Shareholder Value

The return on investment that shareholders receive from a company, including dividends and stock price appreciation.

Volatility of Earnings

The degree of variation of a company's earnings over a specified period, indicating the predictability or stability of its income.