If Reserves in the Banking System Increase by $200, Then

question 45

Multiple Choice

If reserves in the banking system increase by $200, then chequable deposits will increase by $500 in the simple model of deposit creation when the desired reserve ratio is ________.

• A) 0.04
• B) 0.25
• C) 0.40
• D) 0.50

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Definitions:

Joint Venture Investment Account

An account that records the initial and ongoing financial contributions made by the partners of a joint venture, adjusted for their share of profits, losses, and distributions.

Transfer of Assets

The act of moving resources or property from one entity to another, which may involve financial, physical, or intangible assets.

Deferred Exploration Expenditure

Costs incurred in exploratory activities in mining and oil and gas companies that are capitalized as an asset on the balance sheet until the resources are found to be economically viable.

Sundry Assets

Miscellaneous assets on a company’s balance sheet that do not neatly fit into other asset categories, often of minor value.