Which of the Following Is the Simple Money Multiplier Equal

question 92

Multiple Choice

Which of the following is the simple money multiplier equal to?  

• A) 1 divided by the dollar amount of desired reserves 
• B) the dollar amount of total reserves divided by the dollar amount of excess reserves 
• C) the dollar amount of excess reserves divided by the dollar amount of total reserves 
• D) 1 divided by the percentage of deposits that must be held by a bank in the form of reserves

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Definitions:

Discount Rate

In discounted cash flow (DCF) analysis, this rate is applied to calculate the present value of anticipated cash flows.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.

Discount Rate

In finance, it is the interest rate used to determine the present value of future cash flows. In monetary policy, it's the rate at which commercial banks borrow from the central bank.

Salvage Value

This is the estimated residual value of an asset at the end of its useful life.