If the Reserve Ratio Is 10 Percent,$1,400 of Additional Reserves

question 25

Multiple Choice

If the reserve ratio is 10 percent,$1,400 of additional reserves can create up to

• A)$140 of new money.
• B)$14,000 of new money.
• C)$140,000 of new money.
• D)None of the above is correct.

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Definitions:

Common Stock

A type of security that represents ownership in a corporation, entitling holders to a share of the company’s profits through dividends and/or capital appreciation.

Photography Equipment

Tools and devices used in the process of capturing photographs, such as cameras, lenses, lighting, and accessories.

Cash Account

An account that records cash transactions, including receipts and payments of cash.

Ledger Account

A record in the ledger that contains the financial information of a specific account, showing all the changes in that account.