If the Reserve Ratio Is 25 Percent, What Level of Excess

question 270

Multiple Choice

If the reserve ratio is 25 percent, what level of excess reserves does a bank acquire when a customer deposits a $12,000 check drawn on another bank?

• A) $3,000
• B) $6,000
• C) $9,000
• D) $12,000

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Definitions:

Lead Time

refers to the total time that elapses between the initiation and completion of a production process, from order to delivery.

Inventory Holding Cost

The expenses associated with storing unsold goods, including warehousing, insurance, taxes, spoilage, and opportunity costs.

Annual Demand

Annual demand quantifies the total quantity of a particular product or service that consumers are willing to buy over the course of a year.

Price Breaks

Discounts or lower pricing offered by suppliers to buyers as incentives for purchasing larger quantities.