At One Time,the Country of Sylvania Had No Banks,but Had

question 59

Multiple Choice

At one time,the country of Sylvania had no banks,but had currency of $10 million.Then a banking system was established with a reserve requirement of 20 percent.The people of Sylvania now keep half their money in the form of currency and half in the form of bank deposits.If banks do not hold excess reserves,how much currency do the people of Sylvania now hold?

• A) $2 million
• B) $5 million
• C) $9 million
• D) $12 million

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Definitions:

Average Variable Cost

The total variable costs (costs that change with the level of output) divided by the quantity of output produced.

AVC Curve

Stands for Average Variable Cost curve, illustrating the average variable costs of production at different output levels.

ATC Curve

Average Total Cost Curve, a graphical representation showing how the average cost of producing one unit of goods changes with the level of production.

Average Fixed Cost

Average Fixed Cost is the fixed expenses of a company divided by the number of units produced, decreasing as production increases.