Suppose the Fed Reduces the Reserve Ratio from 0

question 48

Multiple Choice

Suppose the Fed reduces the reserve ratio from 0.25 to 0.20 and the current level of demand deposits is $10,000.By how much would excess reserves change?

• A) Excess reserves would increase by $2,500.
• B) Excess reserves would increase by $2,000.
• C) Excess reserves would decrease by $500.
• D) Excess reserves would increase by $500.
• E) Excess reserves would increase by $4,500.

Evaluate decisions based on opportunity costs, ignoring sunk costs.

Understand the impact of automated service technologies on cost structures.

Identify and analyze the fallacies in cost accounting and decision-making.

Calculate per order costs in different service scenarios.

---

Definitions:

Quantity Supplied

The quantity of a product or service that suppliers are ready and can offer for sale at a particular price during a defined timeframe.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price, in a given time period.

Coffee

A brewed drink prepared from roasted coffee beans, which are the seeds of berries from the Coffea plant.

Price Decreases

Refers to a reduction in the price of goods or services, often due to supply and demand factors.