If the Required Ratio of Reserves to Deposits Is R,then

question 19

Multiple Choice

If the required ratio of reserves to deposits is r,then for every $1 in excess reserves,the banking system can potentially increase the money supply by

• A) r.
• B) 1 + r.
• C) 1/r.
• D) 1/(1 - r).
• E) (1 - r)/r.

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Definitions:

Space Occupied

Refers to the area utilized by a company for its operations, including manufacturing, storage, or office space.

After-Sales Department

A division of a business that handles customer service, support, and warranty claims after the sale of a product.

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are listed, instead of adjusting net income on an accrual basis.

Service Department

A division within a company that provides support services rather than producing goods, such as IT or human resources.