When Currency Is Equal to $200 Billion and Reserves Are

question 163

Multiple Choice

When currency is equal to $200 billion and reserves are equal to $350 billion, and we know that the money multiplier is equal to 1.5, then the money supply will be equal to ________.

• A) $825 billion
• B) $225 billion
• C) $366.66 billion
• D) $500 billion

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Definitions:

Direct Materials

Raw materials that can be directly attributed to the production of specific goods or services.

Allowances For Spoilage

Financial adjustments made for the anticipated loss of goods due to spoilage during production or storage.

Inefficiency

The lack of ability or effectiveness to transform inputs into outputs in a cost-effective manner, often resulting in wasted resources.

Practical Standard

An achievable standard that takes into consideration normal working conditions and expected operational inefficiencies.