If the Desired Reserve Ratio Decreases,then

question 144

Multiple Choice

If the desired reserve ratio decreases,then

• A)banks' desired reserves increase and their excess reserves decrease.
• B)bank customers become more willing to make deposits in banks.
• C)banks are able to make more loans.
• D)banks are forced to buy fewer government securities.
• E)banks' desired reserves decrease and their excess reserves do not change.

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Definitions:

Implicit Costs

The opportunity costs that arise from using resources that a company already owns for production, instead of earning revenue from these resources elsewhere.

Explicit Costs

Explicit costs refer to direct payments made to others in the course of running a business, such as wages, rent, and materials.

Variable Cost

Costs that change in proportion to the level of output or production activity.

Baking Supplies

Items and ingredients specifically used for the process of baking, such as flour, yeast, baking soda, and baking pans.