In a 100-Percent-Reserve Banking System, If a Customer Deposits $100

question 54

Multiple Choice

In a 100-percent-reserve banking system, if a customer deposits $100 of currency into a bank, then the money supply:

• A) increases by $100.
• B) decreases by $100.
• C) increases by more than $100.
• D) remains the same.

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Definitions:

Average Operating Assets

The average value of assets used in the production or operation of a company over a specific period.

Sales

The total amount of revenue generated by the sale of goods or services.

Unit Variable Cost

The variable cost incurred to produce one unit of a product, including materials, labor, and variable overhead.