If the Reserve Requirement for a Bank Is $200,000 for a Deposit

question 156

Multiple Choice

If the reserve requirement for a bank is $200,000 for a deposit of $1 million, then the money multiplier is:

• A)2
• B)1.25
• C)20
• D)5

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Definitions:

Inventory

The total amount of goods and materials a company has in stock, including raw materials, work-in-progress, and finished goods.

Beginning Inventory

The price of items on offer for purchase at the onset of an accounting cycle.

Markup

An addition to the purchase cost of items intended to cover both operational costs and generate a profit.

Net Sales

The revenue from sales transactions after subtracting returns, allowances for damaged or missing goods, and discounts.