Which of the Following Does NOT Explain Why the Actual

question 202

Multiple Choice

Which of the following does NOT explain why the actual money multiplier and the potential money multiplier are different?

• A) Banks hold excess reserves during tough economic times.
• B) The interest rate that banks pay on deposits is very low.
• C) Foreign deposits in American banks aren't counted in the actual money multiplier.
• D) Foreign consumers,businesses,and governments hold U.S.dollars.

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Definitions:

Equity Financing

A method of raising capital by selling company shares to investors, in exchange for ownership interest.

Debt Financing

The process of raising capital through the sale of bonds, bills, or notes to individual and/or institutional investors.

Tax Rate

The percentage at which an individual or corporation is taxed.

Depreciate Equipment

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in the asset's value over time.