Sally Writes a $10,000 Check to Harry Who Deposits It

question 122

Multiple Choice

Sally writes a $10,000 check to Harry who deposits it in the same bank.

• A)Both deposits and reserves of depository institutions increase.
• B)Both deposits and reserves of depository institutions remain unchanged.
• C)Reserves at depository institutions increase,but deposits remain the same.
• D)Both deposits and reserves at depository institutions decrease.
• E)Reserves at depository institutions decrease,but deposits remain the samE.

---

Definitions:

Liquidation

The process of bringing a business to an end and distributing its assets to claimants, often occurring when a company is insolvent and unable to meet its financial obligations.

Operating Cycle

An operating cycle is the average period of time it takes for a business to convert its inventory into cash proceeds from sales.

Receivables

Amounts owed to a company by customers for goods or services that have been delivered or used but not yet paid for.

Raw Materials

Basic materials and substances used in the initial production or manufacturing of goods.