A Bank That Has $10,000 in Excess Reserves Can Extend

question 163

Multiple Choice

A bank that has $10,000 in excess reserves can extend new loans up to a maximum of

• A) $1,000.
• B) $9,000.
• C) $10,000.
• D) $100,000.

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Definitions:

Short Run

A period in which at least one of a firm's inputs is fixed, limiting its capacity to adjust its output levels.

Long Run

A period of time in which all factors of production and costs are variable, allowing firms to adjust all inputs.

Marginal Cost

The cost of producing one additional unit of a good or service.

Marginal Revenue

The additional income that an organization receives from selling one more unit of a product or service.