In a Fractional Reserve Banking System with No Currency Where

question 112

Multiple Choice

In a fractional reserve banking system with no currency where res is the ratio of reserves to deposits,the money multiplier is

• A)1 - res.
• B)1 + res.
• C)1/res.
• D)res²

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Definitions:

Dishonoured

Refers to a financial instrument, such as a check or a bill, that is not paid upon presentation for settlement.

Maturity Value

The amount that will be received at the maturity date of an investment, including the principal and any accrued interest.

Note Receivable

A written promise that one party will pay another party a specified sum of money, either on demand or at a set future date.

Interest Due

The amount of interest payment required to be paid on a loan or debt at a specified date.