If a Customer Makes New Deposits of $10,000 to a Bank

question 125

Multiple Choice

If a customer makes new deposits of $10,000 to a bank and the reserve requirement is 15%, then excess reserves will be:

• A)$1,500
• B)$8,500
• C)$10,000
• D)none of the above

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Definitions:

Total Cost

The sum of fixed costs and variable costs incurred by a business in the production of a good or service.

Average Fixed Cost

The fixed costs of production (such as rent, salaries, and equipment) divided by the quantity of output produced.

Total Variable Cost

The sum of all variable costs (costs that vary with production volume) associated with producing a specific amount of a good or service.

Marginal Cost

The supplementary expense arising from creating another unit of a product or service.