If a Bank's Required Reserve Ratio Is 2

question 196

True/False

If a bank's required reserve ratio is 2.5%, an initial injection of $4,000 has the potential to increase the overall money supply by up to $160,000.

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Definitions:

Accounts Receivable Subsidiary Ledger

A detailed ledger that tracks individual accounts receivable transactions and balances for customers.

Cash Receipts Journal

An accounting journal specifically used to record all receipts of cash, detailing the source of each receipt for a given period.

Record Payment

The process of documenting the payment of a bill or an obligation in the business’s financial records.

Revenue Journal

The revenue journal is a ledger book or digital record in accounting that tracks all incoming earnings or revenue transactions generated by business operations.