The Larger the Reserve Requirement,the

question 176

Multiple Choice

The larger the reserve requirement,the

• A)larger the potential deposit multiplier.
• B)smaller the potential deposit multiplier.
• C)more profitable the banks will be.
• D)larger the proportion of an additional deposit that is available to the bank for the extension of additional loans.

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Definitions:

Net Present Value (NPV)

Net Present Value is the difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Present Value

The worth at present of future monetary sums or cash flow streams, evaluated with a preset rate of return.

Cash Flows

The sum of funds flowing in and out of a company, particularly as it influences liquidity.

Capital Budgeting Project

A process of evaluating and selecting long-term investments that are expected to generate revenues or reduce costs, aiding in a firm's strategic planning.