If the Simple Money Multiplier Is 20, the Required Reserve

question 180

Multiple Choice

If the simple money multiplier is 20, the required reserve ratio must be equal to _____

• A) 5 percent.
• B) 0 percent.
• C) 10 percent.
• D) 50 percent.
• E) 20 percent.

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Definitions:

Accounts Receivable

The amount that debtors are required to pay to a company for the goods or services they have received but have not yet compensated for.

Accounts Payable

Obligations of a business to pay for goods or services that have been delivered but not yet paid for.

Inventory

The total amount of goods and materials a company holds for the purpose of resale or production, including raw materials, work-in-progress, and finished goods.

Profit Margin

A financial ratio that calculates the amount of net income earned with each dollar of sales by dividing net profit by total revenue.