If a Bank Receiving a New Deposit of $200 000

question 79

Multiple Choice

If a bank receiving a new deposit of $200 000 would be able,as a result,to increase its lending by,at most,$150 000,what is the desired reserve ratio?

• A)4 percent
• B)25 percent
• C)40 percent
• D)50 percent

Grasp the concept of risk and return in stock ownership, including the variability of returns and the rationale behind the higher average returns of stocks compared to bonds.

Identify the key characteristics of stocks and bonds, including their risk profiles and returns.

Differentiate between the primary and secondary stock markets and understand their functions.

Comprehend the diversification of investment ownership in the U.S. and its impact on households.

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Definitions:

Implicit Costs

The opportunity costs of utilizing resources owned by the firm that could have been employed elsewhere, not directly paid out in cash.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, leading to a decreased cost per unit.

Pin Factory

An example used by Adam Smith to describe the benefits of specialization and division of labor in manufacturing, increasing productivity and efficiency.

Constant Returns to Scale

A situation in production where increasing the amount of inputs results in a proportional increase in the output.