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svetlana [45]
3 years ago
15

In a simplified banking system where deposits are the only form of money and the reserve ratio is 0.2, the deposit multiplier wo

uld be _____.
Business
1 answer:
Rudiy273 years ago
3 0

Answer:

5

Explanation:

The deposit multiplier or money multiplier is calculated by dividing 1 by the reserve ratio.

Money multiplier = 1 / 0.2 = 5

The money multiplier refers to the capacity that banks have to create money.

For example, I deposit $10,000 into my savings account and the reserve ratio is 20%. The bank then loans $8,000 to my neighbor so that he can buy a new bike. The bike's seller will then deposit the $8,000 to his/her bank. The seller's bank will then loan $6,400 to another client that purchases something else. The seller of that something else will then deposit the money into their bank, and the story goes on and on.

All of those transaction were possible because I deposited $10,000 and the banking system created money by multiplying my deposit.

You might be interested in
Compute the 2019 Federal income tax liability and the marginal and effective tax rates in each of the following independent case
muminat

Answer: a.19.59% b.15.11%.

Explanation:

Average tax  rate is given as  the total tax paid divided by  total taxable income which is expressed as a percentage and must be less than the marginal tax rate.

Chandler is single and reports

taxable income of $132,200.

Tax liability: 25,903

Marginal rate: 24 %

Average rate: 17.94 x % = wrong

Average rate = total liable tax/ total income= 25, 903/ 132,200=0.195937 rounded to 0.1959

0.1959 x 100 = 19.59%.correct

b. Lazare, a head of household, records

taxable income of $80,600.

Tax liability: 12,176

Marginal rate: 22 %

Average rate: 12.30 X %= wrong

Average rate = total liable tax/ total income= 12,176/ 80,600= .0.15106= 0.1511

0.1511 x 100 = 15.11%.correct.

4 0
3 years ago
A company with 110,000 authorized shares of $8 par common stock issued 49,000 shares at $13. Subsequently, the company declared
Jet001 [13]

Answer:

$29,400

Explanation:

The company will distribute dividends only to outstanding shares, since the number of outstanding shares is not specified, we should assume that all the 49,000 shares issued are outstanding shares. The company declared a 2% dividend, so we must multiply the current value of the stock times 2% = $30 x 2% = $0.60 per share.

The total amount distributed was 49,000 outstanding shares x $0.60 per share = $29,400

8 0
3 years ago
The resources that contribute to the creation of wealth are known as ______.
vodka [1.7K]
<span>production coefficients.

factors of production.

production technologies.

production aggregates.</span>
7 0
3 years ago
Read 2 more answers
Purely competitive industry X has constant costs and its product is an inferior good. The industry is currently in long-run equi
jasenka [17]

Answer:

increase in output, but not in the equilibrium price of the product. 

Explanation:

The options weren't provided. The full question can be found here - https://www.chegg.com/homework-help/questions-and-answers/perfectly-competitive-industry-x-constant-costs-product-inferior-good-industry-currently-l-q39354625

An inferior good is a good whose demand increases when income falls and whose demand falls when income rises.

When average income falls, the demand for good X rises. The level of output increases as a result of the rise in demand but price doesn't change.

I hope my answer helps you.

5 0
3 years ago
At the end of 2019, Bramble Corp. has accounts receivable of $740,200 and an allowance for doubtful accounts of $69,900. On Janu
ki77a [65]

Answer:

  • The journal to record the write-off is:

         Debit Allowance for doubtful accounts            $6,400

         Credit Accounts receivable                               $6,400

  • Cash realizable value of the accounts receivable (1) before the write-off is $670,300 (2) after the write-off is $670,300.

Explanation:

  • The write-off would impact the allowance for doubtful accounts and the accounts receivable since Bramble Corp. uses the allowance method. See the journals as recorded above.
  • The balance in the allowance for doubtful accounts would have reduced by $6,400 upon the write-off, so did the balance in the accounts receivable, so the effect of the write-off evens out. That led to the cash realizable value of $670,300.
4 0
3 years ago
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