If There Is No Minimum Reserve Requirement in the Banking

question 125

Multiple Choice

If there is no minimum reserve requirement in the banking system,the potential ability of banks to create money is:

• A) Zero.
• B) Unlimited.
• C) Limited by the amount of deposits.
• D) Limited by the number of banks in the banking system.

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Definitions:

Period Cost

Costs that are expensed in the period in which they are incurred, not directly tied to the production process.

Manufacturing Overhead

All manufacturing costs that are not direct materials or direct labor, including indirect materials, indirect labor, and other production-related expenses.

Prime Cost

The combined cost of direct materials and direct labor that are directly involved in the manufacturing of a product.

Direct Labour

The expenses related to workers who are directly engaged in creating products or services.