Which of the Following Statements Is Correct About the Commercial

question 307

Multiple Choice

Which of the following statements is correct about the commercial banks' reserves kept as deposits at the Federal Reserve?

• A) Commercial banks don't have access to their reserves at the Fed.
• B) Commercial banks write checks to other banks on their reserve accounts at the Fed.
• C) Commercial banks can make loans to commercial customers out of these reserves.
• D) The reserves are the banks' only assets.

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Definitions:

Marginal Cost

Marginal cost refers to the increase in total cost resulting from producing one additional unit of a good or service.

Total Revenues

The overall amount of income generated from the sale of goods or services before any expenses are subtracted.

Total Costs

The sum of all expenses (fixed and variable) incurred in the production of goods or services.

Long-Run Total Cost

The total cost incurred by a firm when all inputs, including both fixed and variable costs, are fully adjustable.