Suppose That the Reserve Ratio Is 7 Percent and That

question 38

Multiple Choice

Suppose that the reserve ratio is 7 percent and that a bank has $3000 in deposits.What are its required reserves?

• A) $50
• B) $210
• C) $510
• D) $1200

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Definitions:

Annual Overhead Costs

The total expenses not directly tied to a product or service's production, incurred over a year, such as rent, utilities, and insurance.

Activity Base

A measure used in cost accounting to assign costs to various activities, often driving the allocation of overhead.

Overhead Application

The process of allocating indirect costs to specific cost objects, such as products or departments.