As the Costs Associated with Deposit Outflows ________,The Banks Willingness

question 68

Multiple Choice

As the costs associated with deposit outflows ________,the banks willingness to hold excess reserves will ________.

• A)decrease;increase
• B)increase;decrease
• C)increase;increase
• D)decrease;not be affected

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Definitions:

Net Present Value

Net present value is the difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Fixed Costs

Overheads that do not vary with production or sales volumes, encompassing rental fees, salary payments, and premiums for insurance.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, used to cover fixed costs and generate profit.

Planetary Gearset

A gear system that consists of one or more outer gears (planets) revolving around a central (sun) gear, commonly used in transmissions for its compact size and versatility.