Suppose That People Decide to Hold More Money as Cash

question 17

Multiple Choice

Suppose that people decide to hold more money as cash. Which statement best illustrates the impact of this action on the money multiplier? The money multiplier

• A)decreases because of the decrease in the currency drain ratio.
• B)increases because of the decrease in the currency drain ratio.
• C)increases because of a decrease in deposits.
• D)increases because of the increase in the currency drain ratio.
• E)decreases because of the increase in the currency drain ratio.

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Definitions:

Intra-entity Inventory

Intra-entity Inventory pertains to the goods sold between divisions or entities within the same parent company, affecting consolidated financial statements.

Markup

The difference between the cost of a good or service and its selling price, expressed as a percentage over the cost.

Equity Method

An accounting technique used to record investments in associated companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's profits or losses.