Mort Is Seriously Considering a Major Expansion in the Size

question 20

Multiple Choice

Mort is seriously considering a major expansion in the size of his funeral home. The money spent on this type of project would be classified as a(n)

• A) capital expenditure.
• B) equity expenditure.
• C) off-budget expense.
• D) depreciation charge.

---

Definitions:

Reserves

Funds or commodities set aside for future use or held as a buffer against unforeseen shortages or financial emergencies.

Discount Rate

The interest rate charged by central banks on loans to commercial banks, influencing monetary policy and liquidity.

Money Supply

The cumulative sum of money, including cash, coins, and the funds deposited in checking and savings accounts, accessible in an economy at a definite point in time.

Reserve Requirement

The mandate by central banks determining the minimum amount of reserves that must be held by a commercial bank, directly affecting the bank's capacity to lend.