The Multiple by Which the Commercial Banking System Can Expand

question 26

Multiple Choice

The multiple by which the commercial banking system can expand the supply of money is equal to the reciprocal of

• A) the MPS.
• B) its actual reserves.
• C) its excess reserves.
• D) the reserve ratio.

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Definitions:

Bernoulli's Theorem

A principle in probability that describes the behavior of binomial distributions under certain conditions.

Utility Theory

A framework in economics and finance that analyzes choices under uncertainty, emphasizing the satisfaction or utility derived from each possible outcome.

Central Limit Theorem

A statistical theory stating that the sampling distribution of the sample mean approaches a normal distribution as the sample size becomes large, regardless of the shape of the population distribution.

Expected Opportunity Loss

The expected loss resulting from not choosing the best alternative action.