If the Banking System Has $50 Billion in Excess Reserves

question 93

Multiple Choice

If the banking system has $50 billion in excess reserves, and the required reserve ratio is 25 percent, what is the maximum amount by which the money supply can be increased?

• A) $250 billion
• B) $200 billion
• C) $50 billion
• D) $25 billion

Distinguish between operating expenses and costs directly associated with the manufacturing process.

Comprehend the allocation of costs to ending inventory and cost of goods sold under FIFO and LIFO methods.

Understand the implications of the lower of cost or net realizable value rule on financial statements.

Identify the flow of goods from production to finished goods inventory.

---

Definitions:

Magical Number

The Magical Number, often referred to as "seven plus or minus two," is a theory suggesting the limit of an individual's ability to process, hold, and recall information in short-term memory.

George Sperling

A psychologist known for his research on the capacity of visual memory and the temporal duration of visual sensory memory.

Hermann Ebbinghaus

A psychologist best known for his research on memory, the forgetting curve, and the spacing effect.

Richard Atkinson

A psychologist who, along with Richard Shiffrin, proposed the multi-store model of memory, which includes sensory memory, short-term memory, and long-term memory.