Why Is the Real-World Deposit Multiplier Smaller Than 1/R_d, Where

question 206

Essay

Why is the real-world deposit multiplier smaller than 1/R_d, where R_d is the desired reserve ratio?

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Definitions:

GAAP

Generally Accepted Accounting Principles, which are a common set of accounting rules and standards used for financial reporting.

SYD Calculations

Sum-of-Years' Digits method, a form of accelerated depreciation where depreciation is higher in the earlier years of an asset's life.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is used globally to prepare public company financial statements.

Operating Cash Flow

The cash generated by a company’s normal business operations, indicating whether the company can maintain and grow its operations.