In Macroland There Is $10,000,000 in Currency

question 74

Multiple Choice

In Macroland there is $10,000,000 in currency.The public holds half of the currency and banks hold the rest as reserves.If banks'desired reserve/deposit ratio is 10%, deposits in Macroland equal ______ and the money supply equals _______.

• A)$50,000,000; $60,000,000
• B)$55,000,000; $55,000,000
• C)$50,000,000; $55,000,000
• D)$100,000,000; $100,000,000

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Definitions:

Avoidable Cost

A cost that can be eliminated (in whole or in part) by choosing one alternative over another in a decision. This term is synonymous with relevant cost and differential cost.

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent or salaries.

Contribution Margin

This is the amount remaining from sales revenue after all variable expenses have been deducted.

Financial Reporting

The process of providing financial information to company stakeholders to help in making business decisions.