Divide

question 108

Short Answer

Divide.

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Definitions:

Time Deposits

Time deposits are bank deposits with a fixed term or maturity date, where the depositor agrees not to withdraw the funds until that date, typically earning a higher rate of interest.

Demand Deposits

Bank accounts that allow the account holder to withdraw funds without prior notice, such as checking accounts.

Deposit Expansion Multiplier

The ratio that quantifies the potential increase in total bank deposits that can result from an initial deposit, through the process of banks lending and creating more deposits.

Reserve Ratio

The fraction of deposits that banks are required to keep on hand and not lend out, as mandated by banking regulations.