A Bank's Reserve Ratio Is 7 Percent and the Bank

question 93

Multiple Choice

A bank's reserve ratio is 7 percent and the bank has $1,000 in deposits. Its reserves amount to

• A)$930.
• B)$70.
• C)$7.
• D)$93.

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Definitions:

Factor Markets

Marketplaces where services of the factors of production (like labor, capital, and land) are bought and sold.

Voluntary Exchange

A transaction where both parties agree to trade goods or services by choice.

Perfect Competition

A market structure where many firms sell identical products, entry and exit are easy, and no single buyer or seller can affect prices.

Marginal Cost (MC)

The increase in total cost that results from producing 1 more unit of output. Marginal costs reflect changes in variable costs.