Suppose That the Bank of Oranges Has Excess Reserves of $80,000,000

question 74

Multiple Choice

Suppose that the Bank of Oranges has excess reserves of $80,000,000 and checkable deposits of $500,000,000.If the bank has a reserve requirement of 10 percent,what is the bank's total amount of reserves?

• A) $580,000,000
• B) $130,000,000
• C) $508,000,000
• D) $30,000,000
• E) $0

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Definitions:

Variable Expenses

Costs that change in proportion to the level of production or sales activities of a business.

Fixed Expenses

Costs that do not change with the level of production or sales over a short period, such as rent, salaries, and insurance.

Net Operating Income

Income before interest and income taxes have been deducted.

Drop Product

A strategy or decision by a company to discontinue the production, sale, or support of a product line or item.