An Increase in the Currency Drain

question 506

Multiple Choice

An increase in the currency drain

• A) leads to an increase in excess reserves.
• B) decreases the size of the money multiplier.
• C) results in an increase in deposits.
• D) results in an increase in required reserves.

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Definitions:

Ordinary Annuity

A series of equal payments made at the end of consecutive periods over a fixed length of time.

Compounded Quarterly

When an investment's interest is compounded quarterly, the interest is calculated and added to the principal four times a year.

Perpetuity

A financial instrument that provides a stream of infinite cash flows or payments.

Compounded Monthly

Interest calculated on the initial principal and also on the accumulated interest of previous periods, done monthly.