If the Reserve Ratio Is 5 Percent,$1,000 of Additional Reserves

question 128

Multiple Choice

If the reserve ratio is 5 percent,$1,000 of additional reserves can create

• A)$5,500 of new money
• B)$5,000 of new money
• C)$4,000 of new money
• D)None of the above is correct.

---

Definitions:

Manufacturing Overhead Cost

Expenses related to the manufacturing process that are not directly attributable to individual products, such as utility costs, depreciation, and maintenance of equipment.

Produced Units

The quantity of items manufactured during a specific period.

Direct Manufacturing Cost

Direct manufacturing cost encompasses all expenditures directly tied to the production of goods, including materials and labor but excluding overhead costs.

Produced Units

The quantity of units of a product made during a specific period.