All of the Following Except One Are Reasons the Demand

question 249

Multiple Choice

All of the following except one are reasons the demand deposit multiplier may be smaller in practice than in theory.Which one is not a valid reason?

• A) Banks do not want to hold excess reserves.
• B) Some of the currency generated when bonds are purchased ends up outside of the banking system.
• C) Banks sometimes hold more than their required reserves.
• D) An open market operation may change the public's holding of cash.
• E) All of the above are not valid reasons.

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Definitions:

Voting Rights

The rights of shareholders or members to vote on company or organizational matters, usually at meetings like annual general meetings.

Ledger Accounts

Record books or digital records in accounting that are used to store, organize, and summarize a company's financial transactions, sorted by account.

AASB 10/IFRS 10

Standards dealing with the principles for the preparation and presentation of consolidated financial statements when an entity controls one or more other entities.