If $300 of New Reserves Generates $800 of New Money

question 5

Multiple Choice

If $300 of new reserves generates $800 of new money in the economy,then the reserve ratio is

• A)2.7 percent.
• B)12.5 percent.
• C)37.5 percent.
• D)40 percent.

Derive and interpret the mean, variance, and other probabilities from given hypergeometric distribution scenarios.

Recognize scenarios where hypergeometric distribution is applicable through practical examples.

Understand and apply Poisson distribution and its properties.

Identify the conditions under which Poisson distribution provides a good approximation to binomial probabilities.

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Definitions:

Consideration

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Time Value

The concept that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

Present Value Amount

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Rate of Earnings

Measures the speed at which a company or an investment generates income relative to a certain amount of assets, capital, or equity.