If Required Reserves Are Expressed by RR; the Required Reserve

question 30

Multiple Choice

If required reserves are expressed by RR; the required reserve rate by r_D and deposits by D, the simple deposit expansion multiplier is expressed as:

• A)RDD.
• B)(1/r_D)D
• C)RD.
• D)1/r_D.

---

Definitions:

Withdraw

The act of removing funds from a bank account, or discontinuing participation in an activity or agreement.

Simple Interest

Interest calculated on the principal portion of a loan or deposit, not compounding on earned interest.

Savings Account

An account at a banking institution, offering the preservation of the initial amount with a low interest return.

Deposit Today

The action of placing money into a financial account with the intention that it starts earning interest or grows in value from today onwards.