If Bank Reserves Are 200, the Public Holds 400 in Currency

question 167

Multiple Choice

If bank reserves are 200, the public holds 400 in currency, and the desired reserve/deposit ratio is 0.20, the deposits are ______ and the money supply is _____.

• A) 200; 600
• B) 400; 800
• C) 600; 1,000
• D) 1,000; 1,400

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Definitions:

Marginal Cost

The cost of producing one additional unit of a product, which can include materials, labor, and other variable costs.

Negotiated Transfer

A transfer price that is agreed upon by the selling and buying divisions within the same company through negotiation.

Performance Measures

Metrics or indicators used to assess, track, and improve the efficiency and effectiveness of processes, employees, or organizations.

Senior Managers

Executives responsible for making high-level decisions and implementing policies within an organization.