When a $10 Check Written on the First National Bank

question 138

Multiple Choice

When a $10 check written on the First National Bank of Chicago is deposited in an account at Citibank,then

• A)the liabilities of the First National Bank increase by $10.
• B)the reserves of the First National Bank increase by $ 10.
• C)the liabilities of Citibank increase by $10.
• D)the assets of Citibank fall by $10.

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Definitions:

Optimal Point

The most favorable position or condition that yields the maximum benefit or efficiency in a given situation, such as in investment or production.

Credit Policy

Rules a business adheres to for assessing a customer's eligibility for credit and the stipulations under which it is offered.

Opportunity Cost

The most valuable alternative that is given up if a particular investment is undertaken.

Incremental Cost

The additional cost incurred to produce one more unit of a product or service.