Suppose the Currency Drain Is 20 Ratio Percent and the Desired

question 125

Essay

Suppose the currency drain is 20 ratio percent and the desired reserve ratio is 10 percent.
a.What does the money multiplier equal?
b.If the Fed purchases $10 million of U.S.government securities,by how much will the quantity of money increase or decrease?

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Definitions:

Petty Cash Fund

A small amount of cash kept on hand to pay for minor, incidental expenses of a business, recorded as a current asset on the balance sheet.

Cash Short

A situation where the actual cash on hand is less than the recorded amount in the accounting records, often resulting in a discrepancy during reconciliation.

Petty Cash Receipts

Documentation of small amounts of cash expenditures from a petty cash fund, used for minor business expenses.

Internal Control Problems

Weaknesses or failures in a company’s system of policies and procedures that govern its operations and financial reporting.