The Amount of Reserves That a Commercial Bank Is Required

question 278

Multiple Choice

The amount of reserves that a commercial bank is required to hold is equal to

• A) the amount of its checkable deposits.
• B) the sum of its checkable deposits and time deposits.
• C) its checkable deposits multiplied by the reserve requirement.
• D) its checkable deposits divided by its total assets.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or sales volume.

Average Costs

The total costs (fixed and variable) of production divided by the total quantity of output, indicating the cost of producing each unit.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and loan payments.

Break Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain.