Suppose a Bank Does NOT Hold Excess Reserves and the Reserve

question 346

Multiple Choice

Suppose a bank does NOT hold excess reserves and the reserve ratio is 20%. If Molly deposits $1,000 of cash in her checking account and the bank lends $600 to Freda, the bank can lend an additional:

• A)$400.
• B)$200.
• C)$1,000.
• D)$5,000.

Understand and calculate equivalent annually compounded returns.

Determine economic equivalence in different financial scenarios.

Interpret the impact of compounded interest rates on investment growth over time.

Understand how to calculate the annual rate of inflation using the Consumer Price Index (CPI).

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Definitions:

Sales Clerks

Employees responsible for assisting customers, processing transactions, and managing products within a retail environment.

Days' Sales Uncollected

Days' Sales Uncollected is a financial metric calculating the average number of days it takes a company to collect payments after a sale has been made.

Petty Cash Receipts

Petty cash receipts are documents that record small, immediate cash expenses incurred by a business, tracking the disbursement and replenishment of a petty cash fund.

Reimburse

To pay back money to someone which they have spent or lost.