Suppose a Bank Has $100,000 in Checking Account Deposits with No

question 55

Multiple Choice

Suppose a bank has $100,000 in checking account deposits with no excess reserves and the required reserve ratio is 10 percent.If the Federal Reserve raises the required reserve ratio to 12 percent,then the bank will now have excess reserves of

• A)$12,000.
• B)$0.
• C)-$2,000.
• D)-$12,000.

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Definitions:

Direct Materials Cost

The cost of raw materials that can be directly attributed to the production of goods.

Factory Machinery

Heavy equipment and tools used in a manufacturing or production environment to produce goods.

Factory Overhead Cost

Expenses related to the operation of a manufacturing facility that are not directly tied to a specific product, including utilities, depreciation, and maintenance.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.