If a Bank Receives a New Transaction Deposit of $10,000

question 461

Multiple Choice

If a bank receives a new transaction deposit of $10,000 and the reserve ratio is 15 percent, then the bank could expand its loans by as much as

• A)$1,500.
• B)$8,500.
• C)$15,000.
• D)$66,700.

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Definitions:

Cost of Goods Sold

Costs directly incurred from the process of manufacturing goods that a company sells, including the costs of materials and labor.

Merchandise Sales

The revenue generated from selling goods that a company has purchased or produced for resale.

Gross Margin

The difference between revenue and cost of goods sold, which represents the total profit before deducting operating expenses.

Net Amounts

The remaining values after all deductions, such as discounts or expenses, have been made.