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Alla [95]
2 years ago
12

A required reserve ratio of 7 percent gives rise to a simple deposit multiplier of?

Business
1 answer:
blsea [12.9K]2 years ago
3 0

A required reserve ratio of 7 percent gives rise to a simple deposit multiplier of 14.29.

<h3>What is reserve ratio?</h3>

The reserve ratio is the percentage of reservable liabilities which commercial banks must keep rather than lend or invest. This is a requirement set by the country's central bank, which is the Federal Reserve in the United States. It is also referred to as the cash reserve ratio.

Some key points related to reserve ratio are-

  • The reserve requirement is the minimum amount of deposits that a bank must hold, and it is sometimes used interchangeably with the reserve ratio.
  • Regulation D of the Federal Reserve Board establishes the reserve ratio.
  • Regulation D established uniform reserve requirements with all deposit accounts with transaction accounts and necessitates banks to provide the Federal Reserve with regular reports.
  • Suppose the Federal Reserve determined that the reserve ratio should be 11%. This means that if a bank has $1 billion in deposits, it must keep $110 million in reserve ($1 billion x.11 = $110 million).

To know more about reserve ratio, here

brainly.com/question/13758092

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One of the goals of the Federal Reserve is price stability. For the Fed to achieve this​ goal,
rewona [7]

Answer:

The correct answer is option C.

Explanation:

One of the goals of the federal reserve banks is to have price stability in the economy. Though price stability does not imply zero inflation. A small level of inflation is good for economy as it helps in growth of production.

So in order to acheive the goal of price stability, the rate of inflation should be low such as 1-3% and it should be consistent.

Very high inflation is harmful for the economy as it erodes the real income and wealth. Deflation is also not good for economy as it causes reduction in production and employment

5 0
3 years ago
Which of the following statements regarding uncertainty in liabilities is not correct? Group of answer choices Liabilities can i
nadya68 [22]

Answer: A company can only record a liability when it knows whom to pay, when to pay, and how much to pay

Explanation:

A liability is simply defined as the amount that a particular company owes. Liabilities consist of loans, accrued expenses, defered revenue, and accounts payable.

We should note that liabilities can involve uncertainty in whom to pay. Also, a company can have an obligation of a known amount to a known creditor, but not know when it must be paid.

Based on the options given in the question, the answer will be "a company can only record a liability when it knows whom to pay, when to pay, and how much to pay".

5 0
3 years ago
The market for breakfast cereal is currently in equilibrium. Suddenly there is a storm that destroys the wheat that farmers had
lutik1710 [3]

Answer:

C

Explanation:

It will need to decrease Because the wheat is gone, so it decreases the amount of cereal made.

8 0
3 years ago
A free enterprise system provides individuals the opportunity to make their own economic decisions, without restrictions from th
sergejj [24]

Answer:  The free enterprise system was certainly necessary for Mary Kay Ash to make an impact on the business world.

Explanation: This is because having no restrictions from the government, Mary Kay could set the price of her products, making them competitive in the market.  By selling directly to end consumers, she skipped intermediaries, therefore cut costs and had a great impact on the business world.  Another strategy she used is "try before buying", which became a plus for her products, having satisfied costumers become captive consumers, always coming back for more. The Free Enterprise System was absolutely helpful for Mary Kay Cosmetics to have pressence in the world for 56 years now.

6 0
3 years ago
Read 2 more answers
A portfolios is composed of two stocks, A and B. Stock A has a standard deviation of return of 19%, while stock B has a standard
Brums [2.3K]

Answer:

0.536

Explanation:

The computation of the correlation coefficient is shown below:-

\sigma^2_A \times w^2_A + \sigma^2_B \times w^2_B + 2\times w_A \times w_B \times \rho_{AB} \times \sigma_A \times \sigma_B = 0.034

0.19^2 \times 0.70^2 + 0.25^2\times 0.30^2 + 2*0.70 \times 0.30 \times \rho_{AB} \times 0.19\times 0.25 = 0.034

0.023314 + 0.01995 \times \rho_{AB} = 0.034

0.01995 \times \rho_{AB} = 0.010686\\\\\rho_{AB} = 0.536

Therefore for computing the correlation coefficient between the returns on A and B we simply applied the above formula.

So, according to the question the option is not available. The right answer is 0.536 and the same is not considered

8 0
3 years ago
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