With a Desired Reserve Ratio of 20 Percent, an Increase

question 273

Multiple Choice

With a desired reserve ratio of 20 percent, an increase in reserves of $10,000 could lead to a maximum increase in chequing account deposits in the entire banking system of

• A)$2,000.
• B)$8,000.
• C)$12,500.
• D)$50,000.
• E)$100,000.

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Definitions:

Sold Units

The total number of units of a product that have been sold during a specific period.

Break-Even Point

The point at which total costs and total revenues are equal, meaning there is no profit or loss, and initial investments begin to be recovered.

Dollar Sales

The total monetary value of sales transactions within a specific period, expressed in dollars.

Profit and Loss Statement

A financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a fiscal quarter or year, also known as an income statement.