The Simple Money Multiplier _____

question 94

Multiple Choice

The simple money multiplier _____

• A) equals the reciprocal of the required reserve ratio.
• B) assumes that banks hold excess reserves.
• C) becomes larger as the required reserve ratio increases.
• D) equals required reserves plus excess reserves.
• E) equals total reserves minus required reserves.

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Definitions:

Settle

Completing a financial transaction by exchanging the payment of instruments between parties involved.

Discounting

The process of determining the present value of a payment or a stream of payments that is to be received in the future.

Opposite

In the context of numbers, it refers to the additive inverse of a number, which when added to the original number, results in zero.

Compounded Quarterly

A method where interest is calculated and added to the principal balance four times a year, affecting the total interest accrued over time.