Suppose You Withdraw $500 from Your Checking Account Deposit and Bury

question 16

Multiple Choice

Suppose you withdraw $500 from your checking account deposit and bury it in a jar in your back yard.If the required reserve ratio is 10 percent,checking account deposits in the banking system as a whole could drop up to a maximum of

• A)$0.
• B)$50.
• C)$500.
• D)$5,000.

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Definitions:

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, holding all other inputs constant.

Variable Input

An input in the production process that can be adjusted in the short term, such as labor or raw materials, to change the output level.

Total Output

The combined quantity of production or services produced by an entity in a given period.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.