Assume That the Reserve-Deposit Ratio Is 0

question 33

Multiple Choice

Assume that the reserve-deposit ratio is 0.4.The Federal Reserve carries out open-market operations,purchasing $1,000,000 worth of bonds from banks.This action increased the money supply by $1,750,000.What is the reserve-deposit ratio?

• A)0)2
• B)0)3
• C)0)4
• D)0)5

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Definitions:

Leasing Alternatives

Options available to businesses or individuals for obtaining the use of equipment or property through leasing agreements rather than purchase.

Net Present Value

A financial metric that calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Present Value

The contemporary valuation of foreseeable future earnings or sequences of cash payments, taking into account a specified interest rate.

Net Present Value Method

A method of evaluating the profitability of an investment by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.