If Your Bank Receives a Checkable Deposit That Results in $20,000

question 15

Multiple Choice

If your bank receives a checkable deposit that results in $20,000 in excess reserves, and the banking system makes loans totaling $60,000, the maximum possible, then the money multiplier must be:

• A) 2.
• B) 3.
• C) 3.5.
• D) 4.

---

Definitions:

Spending Variance

The difference between how much a cost should have been, given the actual level of activity, and the actual amount of the cost. A favorable (unfavorable) spending variance occurs because the cost is lower (higher) than expected, given the actual level of activity for the period.

Static Planning Budget

A budget based on a fixed level of activity that does not change with actual levels of output, sales, or other activity measures.

Controlled Costs

Costs that can be influenced or managed by decisions made by managers or company officials.

Actual Costs

Actual costs refer to the genuine expenses incurred in the production, acquisition, or sale of products or services, including materials, labor, and overhead expenses.