If the Reserve Ratio Is 10 Percent and Reserves in the Commercial

question 149

Multiple Choice

If the reserve ratio is 10 percent and reserves in the commercial banking system increase by $10,000, the maximum possible expansion of demand deposits is

• A)$10,000.
• B)$90,000.
• C)$100,000.
• D)$1,000,000.

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Definitions:

Bad News Earnings

Reports of lower than expected earnings, often leading to a negative reaction in the stock market and a decrease in company’s share price.

Negative Earnings Surprise

An event where a company's reported earnings are below the expectations of analysts, often leading to a decline in its stock price.

Stock Returns

The income generated from the investment in shares, comprised of dividends received and capital gains or losses.

Exit Price Approach

A valuation method that determines the price a seller would receive to sell an asset or transferred liability.