If the Required Reserve Ratio Was Lowered

question 361

Multiple Choice

If the required reserve ratio was lowered

• A)banks would be prompted to reduce their lending.
• B)the size of the monetary multiplier would increase.
• C)the actual reserves of banks would increase.
• D)None of the choices are correct.

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Definitions:

Net Profit

The financial gain remaining after subtracting all expenses, taxes, and costs from total revenue, indicating the overall profitability of a business.

Fixed Asset Turnover Ratio

A financial metric that measures a company's efficiency in using its fixed assets to generate sales, calculated by dividing sales by the book value of fixed assets.

Net Fixed Assets

The value of a company's property, plant, and equipment minus any accumulated depreciation, representing long-term investments in the business.

Sales

The exchange of goods or services for money; also refers to the function or department within a business that handles this activity.