If the Fed Increases the Reserve Ratio from 4 Percent

question 365

Multiple Choice

If the Fed increases the reserve ratio from 4 percent to 10 percent, then the money multiplier

• A)decreases from 25 to 10.
• B)decreases from 20 to 10.
• C)increases from 10 to 25.
• D)increases from 10 to 20.

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Definitions:

Percentage-Of-Completion Method

An accounting technique that recognizes revenue and expenses related to long-term projects as a percentage of the work completed during the period.

Cumulative Pretax Income

The total pre-tax income earned by a company over a specified period, before any taxes are deducted.

Useful Life

The period over which an asset is expected to be usable by an entity, affecting its depreciation or amortization schedules.

Revised Estimated

An updated forecast or projection based on new information or a more accurate assessment.