If the Reserve Ratio Is 8 Percent, Then $4,500 of Additional

question 231

Multiple Choice

If the reserve ratio is 8 percent, then $4,500 of additional reserves can create up to

• A)$4,500 of new money.
• B)$48, 913 of new money.
• C)$56,250 of new money.
• D)$75,000 of new money.

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Definitions:

Availability Delay

A period where funds or resources are not immediately accessible or ready for use, often due to processing or logistical reasons.

Total Float

The maximum duration a project task can be postponed without impacting the overall project finish date.

Precautionary Motive

The desire to hold cash or liquid assets to safeguard against future uncertainties and unplanned expenses.

Speculative Motive

The intention to hold cash for the purpose of taking advantage of future opportunities that may arise, such as bargain purchases or earning profits from price changes.