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3 years ago

How does fractional banking allow there to be an increase in the money supply?

1 answer:

4 0

Banks can lend up to 90% of money on deposit in the bank to other clients.
The other 10% that the bank does not lend is called the "fractional reserve".

Now, by lending this 90% to a client, the money supply may increase based on the procedure below:
First client deposits 100$ in the bank
Bank lends 90$ to second client who deposits these 90$ in another bank
This other bank lends 81$ from the deposited 90$ to a third client who deposits them in a new bank.
The new bank lends 72.9$ out of these 81$ to a fourth clients who deposits them in a different bank......and so the cycle continues increasing the money supply

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At the end of its first year, the trial balance of Ivanhoe Company shows Equipment $30,600 and zero balances in Accumulated Depr

Bas_tet [7]

Answer:

Dr Depreciation Expense $3,620

Cr Accumulated Depreciation-Equipment $3,620

Explanation:

Based on the information given we were told that the company had zero balances in both Accumulated Depreciation -Equipment as well as the Depreciation Expense in which the Depreciation amount for the year is estimated to be $3,620 which means that the adjusting entry for depreciation at December 31 will be recorded as:

Preparation of Journal entry

Dec. 31

Dr Depreciation Expense $3,620

Cr Accumulated Depreciation-Equipment $3,620

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4 years ago

Question 6

AleksAgata [21]

Answer:

The answer is,

O To raise money for the corporation.

Explanation:

Issuing share is a method of financing for a corporation. Company can borrow money from external parties such as banks or issue debentures as well. However, the cost of such borrowings tends to be higher than issuing equity stocks and there are many legal necessities as well in such a process.

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3 years ago

A ______ is a piece of real estate owned by multiple, unrelated individuals who, in addition to their ownership rights, each hol

finlep [7]

Answer:

Time-Share Estate

Explanation:

Definition:

A time-share estate is an illustration of a concept also known as fractional ownership. It is a structure that allows individuals to purchase the right of occupancy of a unit of real estate for a specific period.

Of course, a good example of why buyers will choose this type of real estate purchase is to get the use of a unit of housing that is not always in use all year round. For instance, time-sharing is popular with resorts, vacation homes and even with recreational vehicles.

It is important to know also that the time-sharing industry is mostly available within the United States and it is a multi-billion dollar industry, meaning the time-sharing concept is popular in the United States.

Different Types

Fixed Weeks or Floating Weeks Option - as the names suggest, owners are either allowed to pre-determine the specific period of the year and the number of weeks to make use of the estate or choose the floating weeks which leaves the occupant the choice to choose weeks within a given period say January-March, September-November etc.

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3 years ago

Apex corporation surveys its consumers to determine how they view the similarities and dissimilarities among relevant product at

Citrus2011 [14]

The survey done by Apex Corporation on its consumers to find out how they view the similarities and dissimilarities among relevant product attributes for a set of competing brands is an example of PRODUCT POSITIONING RESEARCH. The main aim of a Product Positioning Research is to understand the position of a product or a brand in comparison to a competing product or brand.

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4 years ago

When goods are produced at the lowest possible cost, an economy is said to have achieved:?

kondor19780726 [428]

When goods are produced at the lowest possible cost an economy is said to have achieved?
Answer: production efficiency

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4 years ago