The Money Multiplier Equals

question 104

Multiple Choice

The money multiplier equals:

• A) 1/excess reserves.
• B) excess reserves/loans.
• C) required reserve ratio/excess reserves.
• D) 1/actual reserves.
• E) 1/required reserve ratio.

---

Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over current liabilities.

Acid Test Ratio

A financial metric that assesses a company's ability to pay off its short-term liabilities with its quick assets (cash, marketable securities, and receivables).

Current Assets

Assets that are expected to be converted into cash within one fiscal year or one operating cycle, whichever is longer.

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of a business.