Suppose the Required Reserve Ratio Is 5 Percent and the Fed

question 23

Multiple Choice

Suppose the required reserve ratio is 5 percent and the Fed buys a $10,000 bond.If money is deposited into a commercial bank,what will initially happen to money supply?

• A) It will increase by $10,000.
• B) It will increase by $5,000.
• C) It will increase by 5 percent.
• D) It will increase by $200,000.

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Definitions:

Job and Process Costing

A combined accounting approach that assigns costs to individual units or batches (job costing) and tracks costs across processes for continuous production (process costing).

Predetermined Overhead

An estimate of the manufacturing overhead cost that will be applied to products based on a planned activity level, used for budgetary and costing purposes.

Manufacturing Overhead

The indirect costs associated with manufacturing, including costs related to the operation of the factory, such as utilities and salaries for supervisors.

Weighted Average Method

An inventory valuation method that calculates the cost of goods sold and ending inventory based on the average cost of all units available for sale during the period.