If Jose Deposits $2,000 in His Bank and the Desired

question 45

Multiple Choice

If Jose deposits $2,000 in his bank and the desired reserve ratio is 10 percent,what is the amount of new loans that the bank can make?

• A)$2,000
• B)$200
• C)$1,800
• D)$1,900
• E)$2,200

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Definitions:

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including both materials and labor expenses.

Inventory

Items held by a company for sale in the ordinary course of business or to be used in the production of goods sold.

Contra-Revenue Accounts

Accounts used to record reductions in gross revenue, such as sales returns, allowances, and discounts, to arrive at net revenue.

Gross Profit

The financial metric calculated by subtracting the cost of goods sold from total sales revenue, representing the efficiency of a company in managing its production and sales.