If Banks Receive a Greater Amount of Currency and Do

question 280

True/False

If banks receive a greater amount of currency and do not hold all of this new currency as reserves, the money supply expands.

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Definitions:

Prompt Payment Discount

A reduction in the amount due on a bill offered by a seller to encourage early payment by the buyer.

Operating Cycle

The total time it takes for a company to purchase inventory, sell the products, and collect the cash from the sales.

Cash Cycle

The period it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Inventory

The total amount of goods and materials held by a company intended for sale or production.