Suppose a Chartered Bank Has Demand Deposits of $100,000 and the Desired

question 144

Multiple Choice

Suppose a chartered bank has demand deposits of $100,000 and the desired reserve ratio is 10 percent.If the bank's desired and excess reserves are equal, then its actual cash reserves:

• A)are $30,000.
• B)are $10,000.
• C)are $20,000.
• D)cannot be determined from the given information.

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Definitions:

Economic Profits

Profits calculated by subtracting both explicit and implicit costs from total revenues, representing the additional value created beyond all resource costs.

Accounting Profits

The total revenue of a company minus the explicit costs and depreciation expenses.

Total Costs

Total costs represent the complete sum of all expenses incurred by a business in the production of goods or services, including both fixed and variable costs.

Variable Cost

Costs that change in proportion to the level of activity or volume of goods produced.