In a Fractional Reserve Banking System with No Currency Where

question 112

Multiple Choice

In a fractional reserve banking system with no currency where res is the ratio of reserves to deposits,the money multiplier is

• A)1 - res.
• B)1 + res.
• C)1/res.
• D)res²

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Definitions:

Services Surplus

Services Surplus describes a situation where the value of exported services of a country exceeds the value of its imported services, contributing positively to its trade balance.

Capital and Financial Account

Refers to parts of the balance of payments where capital transfers, investments, and financial derivatives are recorded.

Money Inflows

Financial resources entering a particular entity, such as a business or country, over a period of time.

Financial Account Balance

A component of a country's balance of payments that records transactions of foreign investment associated with that country.