Assume That the Commercial Banking System Has Checkable Deposits of $10

question 89

Multiple Choice

Assume that the commercial banking system has checkable deposits of $10 billion and excess reserves of $1 billion at a time when the reserve requirement is 20 percent. If the reserve requirement is now raised to 30 percent, the banking system then has

• A) excess reserves of $2 billion.
• B) neither an excess nor a deficiency of reserves.
• C) a deficiency of reserves of $.5 billion.
• D) excess reserves of only $.5 billion.

Identify and calculate total period costs under both costing methods.

Calculate the unit product cost under both absorption and variable costing.

Determine the impact of production and sales levels on inventory valuation and income under both costing methods.

Analyze the effects of cost behavior patterns on budgeting and financial decision-making.