Answer:
A) $800,000
Explanation:
Since the current reserve ratio is 20%, and the bank has no excess reserves, then the maximum it can lend if it receives $1 is $800,000.
The bank has currently $50 million in deposits and $10 million in reserves ($6 million in cash and $4 million in the Fed), so its reserves are exactly 20% of its total deposits. So if any new deposits are received, the bank will have to keep as reserves 20% of it (= $1,000,000 x 20% = $200,000).
This type of banking system is called the fractional banking system because banks are only required to keep a fraction of the money they receive as deposits and they can lend the rest to other clients.
When the economy is not at full employment and an expansionary monetary policy is followed:
- Interest rates decrease
- Investment spending increases
When there is an expansionary monetary policy in place, more money is pumped into the economy which means that there are more loanable funds. This increase in the supply of loanable funds will decrease the interest associated with them.
As a result of interest rates being lower, more businesses and people will be able to borrow money and invest in projects thereby increasing investment spending.
In conclusion, there will be an increase in investment spending due to a decrease in interest rates.
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Answer:
<u>A and B are correct</u>
Explanation :
- The TVM concept is based on the value of money which is today may change with time as a rise or fall in prices thus this explains why the interest rates are paid and calculated on the basis of the present values that may change such as future sum of money of cash flows, can get discontinued at the discounted rates.
- Future values can be ascertained based on the present value of the product/assert. Thus the interest rates and inflation rates change as the risks and the consumer's needs will always be present and have existed earlier.
- It's calculated by the present value and future value of money multiplied by the interest rate and the total number of years. I.e
- FV = PV x [ 1 + (i / n) ] (n x t)
Revenue in a business transaction is recognized <u>When </u><u>goods </u><u>or </u><u>services </u><u>are </u><u>provided </u><u>to </u><u>customers </u><u>and at the </u><u>amount expected </u><u>to be </u><u>received </u><u>from the customer. </u>
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<h3>What is revenue?</h3>
- Refers to the amount paid to a company for the provision of goods and services.
- Can only be recognized when that good or service has been provided to the customer.
Until a good or service is provided to the customer who bought it, revenue should not be recognized because it has not been earned by a company.
In conclusion, option C is correct.
Find out more on revenue recognition at brainly.com/question/1380073.
