Assuming Initially That the Required Reserve Ratio = 10%,the Currency-Deposit

question 205

Multiple Choice

Assuming initially that the required reserve ratio = 10%,the currency-deposit ratio = 75%,and the excess reserve ratio = 156%,an increase in the currency-deposit ratio to 150% causes the M1 money multiplier to ________,everything else held constant.

• A)increase from 0.73 to 0.78
• B)decrease from 0.73 to 0.61
• C)increase from 1.54 to 1.67
• D)decrease from 1.67 to 1.54

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Definitions:

Benchmarks

Standard points of reference against which things can be measured or assessed, often used for comparing performance or quality.

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The process of monitoring and evaluating the advancement of activities, projects, or strategies towards achieving defined objectives.

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Specific, measurable goals that an organization seeks to achieve within a defined time frame to fulfill its strategic plans.