If the Fed Were to Increase the Required Reserve Rate

question 76

Multiple Choice

If the Fed were to increase the required reserve rate from ten percent to twenty percent, the simple deposit expansion multiplier would:

• A)Double
• B)Increase by 10 percent
• C)Decrease by a factor of ten
• D)Be half as large as it was before the increase

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Definitions:

Cost-Plus Pricing

A pricing method that involves adding a consistent percentage markup to the total production cost of a product or service to set its sale price.

Mark-Up Percentage

The percentage added to the cost price of goods to cover overhead and profit, determining the selling price.

Material Charge

A fee or cost applied for the materials used in the manufacturing or production of goods.

Material Cost

The cost of raw materials and components used to create a product.