If the Required Reserve Ratio Is 10 Percent,currency in Circulation

question 62

Multiple Choice

If the required reserve ratio is 10 percent,currency in circulation is $400 billion,checkable deposits are $1,000 billion,and excess reserves total $1 billion,then the M1 money multiplier is

• A)2.5.
• B)2.8.
• C)2.0.
• D)0.7.

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Definitions:

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the preparation of financial statements globally.

Inventories

Items held for sale in the ordinary course of business, as well as materials and components intended for use in the production process.

GAAP

A universally recognized set of rules and standards for financial reporting, applied within a specific legal territory, known as Generally Accepted Accounting Principles.

Income Statement

A financial report that provides a summary of a company's revenues, expenses, and profits/losses over a specific period of time.