Answer:
c) keep a portion of deposits in reserves but lend out the rest.
Explanation:
Fractional reserve banking -
It is the system , where the fraction of the bank deposits are backed by the actual cash money on hand and is for the withdrawal purpose .
This helps to expand economy of the country , by lending more .
The bank reserves certain amount with itself and the rest amount is given for the lending purpose .
Answer:
a. 9,000; 10,000
Explanation:
The computation is shown below:
The money multiplier is
= 1 ÷ 0.10
= 10
Now If $1,000 are deposited in banks and the expected reserve ratio is 0.10 ration so the lending amount is $900.
And now if we considered the money multiplier, so it would be increased by
= $900 × $10
= $9,000
And, the increase in money supply is
= $9,000 + $1,000
= $10,000
Hence, the correct option is a.
Answer:
The correct answer is 3.859 %
Explanation:
Year 2015 = 207.3
Year 2016 = 215.3
Year 2016 (215.3) - Year 2015 (207.3) = 8
Rule of three
207.3 ------- 100%
8 ---------- ?
(8 x 100) ÷ 207.3 = 3.859%
Answer:
Year Cashflow [email protected]% PV
$ $
0 (40,000) 1 (40,000)
1 12,000 0.9259 11,111
2 12,000 0.8573 10,288
3 12,000 0.7938 9,526
4 16,000 0.7350 <u>11,760</u>
NPV <u> 2,685</u>
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Explanation:
Net present value is the difference between present value of cash inflows and initial outlay. The present value of cash inflows were obtained by multiplying the cash inflows by discount factors. The discount factors were calculated using the formula (1 + r)-n, where n represents number of years and r denotes discount rate.
