Assume That a Bank Has $2,000 in Total Reserves and $10,000

question 96

Multiple Choice

Assume that a bank has $2,000 in total reserves and $10,000 in checkable deposits and the required reserve ratio on checkable deposits is 20%.This bank's excess reserves equal

• A)$500.
• B)$250.
• C)$750.
• D)zero.

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Definitions:

Variable Cost

A cost that changes in proportion to the level of output or activity in a company.

Fixed Cost

Costs that remain constant in total, regardless of changes in the level of production or sales volume, such as rent, salaries, and insurance.

Budgeted Fixed Expenses

Estimated costs that do not change with the level of activity within a certain range and time period.

Inventory Purchases

The total cost of buying raw materials and goods for sale during a specific accounting period.