The Multiple by Which the Commercial Banking System Can Increase

question 163

Multiple Choice

The multiple by which the commercial banking system can increase the supply of money on the basis of each dollar of excess reserves is equal to

• A) the reciprocal of the required reserve ratio.
• B) 1 minus the required reserve ratio.
• C) the reciprocal of the income velocity of money.
• D) 1/MPS.

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Definitions:

Cash Budgets

Financial plans that estimate cash inflows and outflows over a specific period, helping businesses manage their liquidity and financial stability.

Depreciation Expense

The allocated amount of an asset's cost over its useful life, used to account for declines in value over time.

Financial Expenses

Costs associated with the borrowing of funds or the costs incurred by an investment, including interest payments and other fees.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period of time, typically used to manage liquidity.