The Multiple by Which the Commercial Banking System Can Expand

question 72

Multiple Choice

The multiple by which the commercial banking system can expand the supply of money is equal to:

• A) The ratio of actual reserves to required reserves
• B) The reciprocal of the federal funds rate
• C) The reciprocal of the reserve ratio
• D) The ratio of required reserves to actual reserves

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Definitions:

Monetary

Relating to money or currency, often referring to financial strategies or policies involving money supply and interest rates.

Non-monetary

Refers to items or assets that cannot be easily expressed in money terms, such as certain intangible assets and physical items.

AASB 121

The Australian Accounting Standards Board guideline on the effects of changes in foreign exchange rates on financial reporting.

Foreign Exchange Rates

The price at which one currency can be exchanged for another currency, which can fluctuate due to market conditions.