The Quantity of Money That the Banking System Can Create

question 126

Multiple Choice

The quantity of money that the banking system can create is limited by

• A)bank managers' decisions.
• B)the monetary base, desired reserves, and desired currency holdings.
• C)the number of consumers who apply for loans.
• D)the credit ratings of the consumers who are applying for loans.
• E)the quantity of bank notes released by the Bank of Canada.

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Definitions:

Paid-In Capital

The total amount of money shareholders have invested in the company through the purchase of its stock.

Par

The face value of a bond or other financial instrument, often used in reference to its original issue value.

Stated Value

A value that is assigned to a share of stock by the company's board of directors, not based on market value, but used for accounting and reporting purposes.

Excess of Par

The amount by which a security's sale or issue price exceeds its par value.