If Required Reserves Are Expressed by RR; the Required Reserve

question 57

Multiple Choice

If required reserves are expressed by RR; the required reserve rate by rD and deposits by D, the simple deposit expansion multiplier is expressed as:

• A) RD × D.
• B) (1/rD ) D.
• C) RR × D.
• D) 1/rD.

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Definitions:

Activity Changes

Refers to adjustments or variations in the level of operations or processes within an organization, often impacting costs and productivity.

Variable To Fixed Costs

The process of converting costs that vary with production volumes into costs that remain constant regardless of volume.

Direct Labor

Workers or employees who are directly involved in the production of goods or services, whose labor can be easily traced to the product.

Committed Fixed Costs

Long-term fixed costs that cannot be easily altered in the short term, such as leases, depreciation on equipment, and salaries of permanent employees.