The Following Question Refer to the Table That Follows

question 24

Multiple Choice

The following question refer to the table that follows. Assume that there is a fractional-reserve banking system, that the legal reserve requirements are 10 percent, and that the balance sheet for Bank X is as follows:

-Bank X has excess reserves of

• A) $3,000,000.
• B) $2,000,000.
• C) $1,667,000.
• D) $1,000,000.
• E) $0.

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Definitions:

Mark-up

The margin calculated by subtracting the cost of a product or service from its sale price, then dividing by the cost, expressed as a percentage.

Retail Price

The price at which goods are sold to the public, typically higher than the wholesale price.

Mark-up

Increment on the buying price of products targeted to offset operational costs and profits.

Selling Price

The price at which a product or service is sold to the consumer.