Suppose There Is a Bank Panic

question 204

Multiple Choice

Suppose there is a bank panic.Which of the following would not be a consequence of this bank panic?

• A)Bank total reserves would decrease.
• B)Required reserves would increase.
• C)Bank checking account balances would decrease.
• D)Individual banks would have to shrink the value of loans they made.
• E)The economy would likely enter into a recession.

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Definitions:

Variable Expense

Costs that vary directly with the level of production or sales volume, such as raw materials and commission fees.

Finished Goods Inventory

The inventory of finished goods available for sale but still awaiting purchase by consumers.

Direct Labor Hours

The collective amount of time spent by employees actively engaged in the production process.

Unit Product Cost

The total cost associated with creating one unit of product, including direct labor, direct materials, and allocated overhead.