If a Bank Does Not Have Enough Reserves,it Can

question 83

Multiple Choice

If a bank does not have enough reserves,it can:

• A) Buy bonds on the open market.
• B) Raise the interest rate it charges borrowers.
• C) Borrow reserves from the discount window.
• D) Make more loans.

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Definitions:

Manufacturing Overhead

All manufacturing costs that are not directly tied to a specific product or production activity, including utilities, rent, and salaries for supervisors.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate years.

Direct Materials Costs

The cost of raw materials directly used in the production of goods, which can be easily traced back to the finished product.

Predetermined Overhead Rate

The rate calculated before the period begins, used to allocate manufacturing overhead costs to individual units of production based on a consistent measure, such as direct labor hours.