When the Fed Raises the Required Reserve Ratio, Then The

question 249

Multiple Choice

When the Fed raises the required reserve ratio, then the:

• A) ability of banks to make loans is restricted.
• B) ability of banks to make loans is enhanced.
• C) ability of banks to make loans is unaffected.
• D) interest rate that banks pay to the Fed to borrow money is increased.
• E) interest rate that banks pay to other banks to borrow money is increased.

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Definitions:

Sales Mix

The relative proportions in which a company’s products are sold. Sales mix is computed by expressing the sales of each product as a percentage of total sales.

Monthly Sales

The total revenue generated from sales activities during a specific month, often used as a measure of business performance.

Break-Even Point

The level of production or sales at which total revenues equal total expenses, resulting in zero net profit or loss.

Variable Expenses

Costs that fluctuate with production or sales volume, such as materials, utilities, and commissions.