When a Bank Has Unplanned Reserves

question 575

Multiple Choice

When a bank has unplanned reserves

• A) it can create money.
• B) it can make loans.
• C) it has too many loans.
• D) Both answers A and B are correct.

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Definitions:

Marginal Rate

The rate at which the cost or value of something changes with a one-unit increase in quantity or production.

Taxable Income

The amount of income used to calculate how much tax an individual or a company owes to the government in a given tax year.

Average Tax Rate

The proportion of total income that is paid in taxes, calculated by dividing total taxes paid by total income.

Tax Structure

The system or framework of how taxes are imposed in an economy, including rates, bases, and who is taxed.