To Reach the Maximum Money Multiplier, It Is Assumed That

question 115

Multiple Choice

To reach the maximum money multiplier, it is assumed that

• A) commercial banks keep the amount of reserves. equal to total bank deposits.
• B) all loans get redeposited in a checkable account.
• C) there is insufficient loan demand.
• D) loans are diverted into circulating currency.

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Definitions:

Journal

A book or electronic record in which transactions are recorded in chronological order before they are posted to ledger accounts.

Page Number

A number assigned to a specific page in a document or book to facilitate organization and reference.

Journalizing

Journalizing is the process of recording transactions in the company's journal, marking the first step in the accounting cycle by documenting all financial transactions.

Ledger

The principal book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type.