If the Proceeds of All Loans Are Deposited Somewhere in the Banking

question 57

Multiple Choice

If the proceeds of all loans are deposited somewhere in the banking system and if rr denotes the reserve-deposit ratio, then the total money supply is:

• A)reserves divided by rr.
• B)1/rr.
• C)reserves times rr.
• D)reserves divided by (1 - rr).

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Definitions:

Desired Ending Inventory

The ideal quantity of goods a company aims to have on hand at the end of an accounting period to meet customer demand without overstocking.

Cash Disbursements

Payments made in cash or through cash equivalents, including expenses, debt payments, and purchases of goods and services.

Cash Receipts

The total amount of cash collected by a business during a given period, including revenues and other forms of income.

Financing Section

Part of the cash flow statement that shows the net flows of cash used to fund the company, including debt, equity, and dividends.