Safety Stock Exists for Which of the Following Reasons

question 20

Multiple Choice

Safety stock exists for which of the following reasons?

• A)To allow less expensive purchases by buying more.
• B)To allow for transportation time.
• C)To provide protection against the uncertainties of supply and demand.
• D)None of these selections.

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Definitions:

Secondary Reserves

Liquid assets held by financial institutions as backup funds for unforeseen needs, not directly utilized in lending or investment.

Required Reserves

The minimum amount of funds that banks are required to hold in reserve against deposits, as mandated by central banks.

Money Supply

The total amount of monetary assets available in an economy at any given time.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, including regulating interest rates and managing the country's money supply.