A Banks That Has Excess Reserves Can Earn Additional Income

question 13

Multiple Choice

A banks that has excess reserves can earn additional income by lending the money overnight

• A)To the Fed at the prime rate minus 1 percent.
• B)To other banks at the prime rate minus 1 percent.
• C)To the Fed in the federal funds market.
• D)To other banks in the federal funds market.

---

Definitions:

Unadjusted Cost of Goods Sold

The initial calculation of all costs directly associated with the production of goods sold by a company, not including any adjustments for inventory methods or valuation changes.

Operations

The day-to-day activities involved in running a business that are necessary for producing goods and services and generating revenue.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used as a basis for assigning labor costs to products.

Predetermined Overhead Rate

An estimated overhead rate used to apply manufacturing overhead costs to products, calculated before the costs are actually incurred.