If Reserves Increase by $5 Million,what Is the Difference in the Resulting

question 49

Multiple Choice

If reserves increase by $5 million,what is the difference in the resulting change in checkable deposits when the required reserve ratio is 12.5 percent compared to when it is 10 percent?

• A)$12.5 million
• B)$10 million
• C)$2.5 million
• D)$100 million

---

Definitions:

Stock Dividend

A form of dividend payment made in additional shares of the issuing corporation, rather than in cash.

Reverse Stock Split

A corporate action that consolidates the number of existing shares of stock into fewer, proportionally more valuable shares.

Shares

Units of ownership interest in a corporation or financial asset, providing a proportionate claim on its assets and profits.

Stock Split

An action by a corporation where it splits its current shares into numerous shares, aiming to increase the shares' liquidity.