Jeremiah Deposits in a Bank an Amount of $1000 That

question 183

Essay

Jeremiah deposits in a bank an amount of $1000 that he had been holding at home in a jar for a long time.
a.If the banking system is 100 percent reserve,how does the money supply change?
b.If the reserve requirement is 10 percent and the bank holds no excess reserves,how does the money supply change?
c.If the reserve requirement is 10 percent and the bank holds an excess reserve of 2 percent,how does the money supply change?

---

Definitions:

Overhead Rate

A calculation used to allocate indirect costs to produced goods, based on a specific base, such as labor hours.

Direct Labor Cost

The total cost of employment for employees who directly contribute to the production of goods or services, including wages and benefits.

Machine-Hours

A measure of the total time that machines are operating in a manufacturing process.

Predetermined Overhead Rate

The predetermined overhead rate is calculated by dividing estimated overhead costs by an allocation base, such as direct labor hours, to allocate overhead costs to products or services.