If the Required Reserve Ratio Is 10 Percent and a Bank

question 46

Multiple Choice

If the required reserve ratio is 10 percent and a bank receives a new deposit for $100,000, then the _____

• A) bank must keep $5,000 in excess reserves.
• B) bank's required reserves increase by $45,000.
• C) bank's liabilities increase by $100,000.
• D) bank must keep $10,000 in excess reserves.
• E) bank can increase its loans by up to $400,000.

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Definitions:

Aggregate Plan

A production plan for a medium term that lays out levels of output, inventory, staffing, and other decisions that affect the overall operations.

Forecast Errors

Mistakes or deviations from the actual demand in predicting future sales or demand.

Aggregate Plans

Strategies for allocating resources in production to meet expected demand over a medium-term time frame, focusing on balancing supply with demand.

Planning Period Cost

The total expenses associated with planning and executing operations over a specific period, including materials, labor, and overhead.