Table 10-3 The Following Information Pertains to the Bank of Kamloops

question 72

Multiple Choice

Table 10-3
The following information pertains to the Bank of Kamloops.
-Refer to the Table 10-3.Assume that all other banks hold only the required 5 percent of deposits as reserves and people hold only deposits and no currency.If the Bank of Kamloops decides to hold exactly 5 percent in reserves,by how much would the economy's money supply increase?

• A) $500
• B) $1200
• C) $1500
• D) $2000

---

Definitions:

Convertible Debt

A type of bond that can be converted into a predetermined number of shares of the issuing company.

IFRS

International Financial Reporting Standards, a set of global accounting guidelines for preparing financial statements.

Proceeds

refer to the total amount of money received from transactions, often associated with the sale of goods, services, or assets.

Effective-Interest Method

A method of calculating interest that considers the compounding of interest, making it a more accurate measure of interest expense or income over the life of a financial instrument.