Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which of the following, when reduced, increases the amount of money banks have available to lend?

Interest rates on loans

Outstanding bonds

Capital stock

Reserve requirements

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Verified step by step guidance

Understand the concept of reserve requirements: Reserve requirements are the minimum amount of reserves that banks must hold, typically set by a central bank. These reserves cannot be lent out, and reducing reserve requirements allows banks to lend more money.

Analyze the impact of reserve requirements on lending: When reserve requirements are reduced, banks are required to hold less money in reserve. This increases the amount of money they can use for loans, thereby increasing their lending capacity.

Compare reserve requirements to other options: Interest rates on loans, outstanding bonds, and capital stock do not directly increase the amount of money banks have available to lend. Reserve requirements directly affect the lending capacity of banks.

Relate reserve requirements to monetary policy: Central banks often adjust reserve requirements as part of monetary policy to influence the economy. Lowering reserve requirements can stimulate economic activity by increasing lending and investment.

Conclude the reasoning: Reducing reserve requirements increases the amount of money banks have available to lend, making it the correct answer in this context.