The Main Reason That the Fed Now Requires Banks to Hold

question 149

Multiple Choice

The main reason that the Fed now requires banks to hold a certain fraction of their deposits in reserves is

• A)because banks would otherwise attempt to keep all of their deposits on reserve.
• B)to ensure the safety of the deposits.
• C)because this allows the Fed to manipulate the money supply.
• D)historical continuity.

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Definitions:

Plantwide Overhead Rate

A single overhead absorption rate calculated for an entire manufacturing plant, applied uniformly to all units produced.

Volume-related Measures

Metrics that are influenced by or correlate with the volume of production or sales.

Plantwide Overhead Rate Method

A single overhead absorption rate used across an entire factory or plant, applied to all units produced regardless of department or product line.

Unit Of Product

A unit of product is a standard measure of quantity or output which can be counted or used to quantify inventory, production, or sales in business operations.