Assume That the Reserve Requirement Is 10 Percent

question 80

Multiple Choice

Assume that the reserve requirement is 10 percent.If a bank has total deposits of $80 million, then the required reserves must equal:

• A)$80 million.
• B)$12 million.
• C)$50 million.
• D)$8 million.
• E)$10 million.

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Definitions:

Variable Production Costs

Variable production costs are expenses that vary directly with the level of production, such as raw materials and direct labor costs.

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance expenses.

Net Advantage

The overall financial benefit gained from a particular investment or business decision, considering all relevant costs and revenues.

Variable Production Costs

Costs that change in proportion to the level of production output, such as raw materials and direct labor.