If the Currency Drain Ratio Is Zero,which of the Following

question 129

Multiple Choice

If the currency drain ratio is zero,which of the following situations leads to the greatest total increase in the quantity of money?

• A)an increase in the monetary base of $100,000 when the desired reserve ratio is 5 percent
• B)an increase in the monetary base of $120,000 when the desired reserve ratio is 10 percent
• C)an increase in the monetary base of $200,000 when the desired reserve ratio is 20 percent
• D)an increase in the monetary base of $250,000 when the desired reserve ratio is 15 percent
• E)an increase in the monetary base of $100,000 when the desired reserve ratio is 50 percent

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Definitions:

Income Summary Account

A temporary ledger account used during the closing process that accumulates revenues and expenses before transferring the net amount to the capital or retained earnings account.

Net Income

The sum of money a company retains as profit after all financial obligations and taxes are deducted from its total income.

Credit Balance

An accounting term indicating that the total credits in an account exceed the total debits, often signifying a financial obligation owed to the account holder.

Post-closing Trial Balance

A financial statement prepared after closing entries are made, listing only the accounts with balances to be carried over to the next accounting period.