The Maximum Increase in the Money Supply Possible from a Deposit

question 99

Multiple Choice

The maximum increase in the money supply possible from a deposit of $D into the banking system where R is the reserve requirement is

• A)(1 / R)(D − R).
• B)R × D.
• C)(1 / R)(1 − R)D.
• D)(1 / R)D.

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Definitions:

Deposit Only

A banking feature allowing for the deposit of funds into an account but not permitting withdrawals without specific authorization.

Indorsement

Indorsement refers to the act of signing one's name on the back of a negotiable instrument, such as a check, thereby transferring rights or title to another party.

Film Arts

The field concerned with the creation, analysis, and critique of films as a form of artistic expression.

Conditional Indorsement

An endorsement on a negotiable instrument that specifies conditions under which the endorser can be held liable.