If the Required Reserve Ratio Is 10 Percent, the Simple

question 127

Multiple Choice

If the required reserve ratio is 10 percent, the simple money multiplier must be equal to _____

• A) 5.
• B) 10.
• C) 20.
• D) 40.
• E) 50.

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Definitions:

Disbursements

Money paid out by a business or an organization for various purposes, including expenses, investments, and dividends.

Optimal Initial Cash Balance

The ideal amount of cash that a company should hold at the start of a period to efficiently meet its operational needs and investment opportunities, while minimizing holding and shortage costs.

Transferring Funds

Transferring funds involves moving money from one account to another, either within the same financial institution or across different institutions.

Optimal Initial Cash Balance

The ideal amount of money a business should hold at the start to minimize costs while avoiding liquidity issues.