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1 year ago

If the reserve requirement of a bank is 33%, then $100 of MO will lead to how much of M1?

Business

1 answer:

lesantik [10]1 year ago

5 0

If the reserve requirement of a bank is 33%, then $100 of MO will lead to $300 of M1. Thus, option (a) is correct.

What is bank?

The term bank refers to the financial institution offering the services related to the term money. The bank is manage financial system to handling accounts and manage the cash.

The bank is 33%

Money Multiplier= $\frac{1}{Reserve Requirement}$

Money Multiplier= 1/33%

Money Multiplier = 3.03

Money Multiplier = 3 (Approximately)

M1= Money Multiplier×M0

M1= 3×100

M1 = $300

$100 of M0 will lead to $300 of M1.

As a result, the MO of the bank can lead to the $300. Therefore, option (a) is correct.

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Your question is incomplete, but most probably the full question was

O $300

O $33

O $1000

O $330

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Answer:

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Explanation:

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2 years ago

On April 17, 2014, Naughton Ltd. received an order from a customer for a delivery to be made in May 2014. Naughton Ltd. does not

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Answer:

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Following The accrual principle - an accounting concept that requires accounting transactions to be recorded in the time period in which they actually occur, rather than the period in which the cash flows related to them occur or the transaction are received.

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3 years ago

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3 years ago

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Answer:

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3 years ago

Read 2 more answers

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Answer:

Scarbrough will receive and record cash of $538,685

The journal entry to record this transaction would be:

Debit Credit

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Interest Expense $89,700

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Debit Cash for $2900300, debit Interest Expense for $89700, and credit Notes Payable for $2990000

Explanation:

In order to calculate the amount Scarbrough will receive and record cash we would have to make the following calculation:

Scarbrough will receive and record cash=Receivables-Amount of the hold back-Withheld as fee income-Less: Withheld as interest expense

Receivables= $600,000

Amount of the hold back=$600,000 x 5%=$30,000

Withheld as fee income=$600,000 x 3%=$18,000

Withheld as interest expense=$600,000 × 15% × 54/365=$13,315

Therefore, Scarbrough will receive and record cash=$600,000- $30,000-$18,000-$13,315=$538,685

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According to the given data to journal entry to record this transaction would be the following:

Debit Credit

Cash $2,900,300

Interest Expense $89,700

Notes Payable $2,990,000

Interest Expense=$2,990,000 x 3%=$89,700

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