Lenders normally wish to offer their funds for the short term, but most borrowers prefer to borrow over the long term. Resolving this mismatch is known as:
Answer(s): C
The linking of net savers with net borrows is known as:
Answer(s): A
Which of the following describes the eventual increase in bank deposits that will result from the banking system receiving an additional £2bn of cash deposits whilst holding a cash ratio (or reserve ratio) of 7%?
Answer(s): D
£100 of new cash is issued, which is then deposited in a bank which is part of a banking system operating a cash ratio of 10%. The maximum possible increase in the money supply which can follow from this transaction, additional to the initial deposit, is
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