If There Is Only One Bank in an Economy

question 32

Multiple Choice

If there is only one bank in an economy:

• A) Reserves never leave the bank.
• B) Transactions accounts equal bank reserves.
• C) Loans equal bank reserves.
• D) Loans equal transaction accounts.

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Definitions:

Stock Dividends

The payment of additional shares of a company to its existing shareholders instead of cash.

Stock Splits

A corporate action in which a company divides its existing stock into multiple shares to increase the liquidity of the shares, though the market capitalization remains the same.

Shareholder's Wealth

Shareholder's Wealth is the sum total of the capital value of a company's shares plus any retained earnings or losses. It represents the shareholders' stake in the company.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the overall value of one's holdings remains the same.