If the Required Reserve Ratio (RRR)is 10 Percent and the Fed

question 27

Multiple Choice

If the required reserve ratio (RRR) is 10 percent and the Fed sells a $5,000 bond to an individual who pays for it with a check,the money supply will

• A) not change
• B) decrease by $4,500
• C) increase by $4,500
• D) decrease by $5,000
• E) increase by $5,000

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Definitions:

Inventory

Goods and materials that a business holds for the ultimate goal of resale or processing.

Retail Method

A technique used by retailers to value inventory based on the retail price of goods, typically used to estimate ending inventory and cost of goods sold.

Inventory Cost

The total cost associated with holding and managing inventory, including costs of storage, insurance, deterioration, and obsolescence.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products or the costs associated with providing its services.