In the Simple Deposit Expansion Model,a Decline in Checkable Deposits

question 84

Multiple Choice

In the simple deposit expansion model,a decline in checkable deposits of $500 when the required reserve ratio is equal to 10 percent implies that the Fed

• A)sold $500 in government bonds.
• B)sold $50 in government bonds.
• C)purchased $50 in government bonds.
• D)purchased $500 in government bonds.

---

Definitions:

Cycle Inventory

The portion of inventory that a company cycles through to fulfill its regular sales orders.

Indirect Materials

Materials used in the production process that do not become part of the final product, such as lubricants and cleaning supplies.

Transaction Cost

The expenses incurred when buying or selling goods or services, including fees, communication charges, and other financial costs.

Management Cost

Expenses associated with the administration and operation of a business, including salaries of managers and costs of strategic activities.