Refer to the Above Information

question 181

Multiple Choice

Refer to the above information.If the desired reserve ratio falls from 25 percent to 10 percent, excess reserves of this single bank will:

• A)rise by $6,000 and the monetary multiplier will increase from 4 to 10.
• B)rise by $60,000 and the monetary multiplier will increase from 4 to 10.
• C)fall by $6,000 and the monetary multiplier will decline from 30 to 10.
• D)fall by $2,000 and the monetary multiplier will decline from 10 to 4.

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Definitions:

Contribution Format

A type of income statement layout that separates variable costs from fixed costs, highlighting the contribution margin.

Absorption Costing

A technique in cost accounting that incorporates all costs of production, including fixed and variable, into the valuation of inventory and cost of goods sold.

Variable Costing

An accounting method that includes only variable production costs as product costs, treating fixed manufacturing overhead as an expense of the period in which it is incurred.

Unit Product Cost

The total cost associated with producing a single unit of a product, including direct materials, direct labor, and allocated overhead.