If There Is No Minimum Reserve Requirement in the Banking

question 125

Multiple Choice

If there is no minimum reserve requirement in the banking system,the potential ability of banks to create money is:

• A) Zero.
• B) Unlimited.
• C) Limited by the amount of deposits.
• D) Limited by the number of banks in the banking system.

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Definitions:

Days' Sales

A measure often used in the context of 'Days' Sales in Inventory' which indicates the average number of days it takes for a company to sell its inventory.

Raw Materials Inventory

Consists of the basic materials and components required to manufacture goods.

Production

The process of creating, manufacturing, or enhancing products or services for sale.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency in managing stock levels.