If All Banks Have Zero Excess Reserves,the Desired Reserve Ratio

question 65

Multiple Choice

If all banks have zero excess reserves,the desired reserve ratio is 10 percent,and a cheque for $1 million on Bank XYZ is deposited in Bank ABC,then excess reserves now equal

• A)$1 million.
• B)$900,000.
• C)$450,000.
• D)0)

---

Definitions:

Direct Method

An accounting approach where costs are directly traced to objects, such as products or services, without using cost drivers or allocation bases.

Cost of Goods Sold

The direct expenses tied to the production of goods sold by a company, including the cost of the materials and labor directly used to create the good.

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operations is used, instead of being derived from the income statement.

Cost of Goods Sold

The expenses directly tied to the manufacturing of the products a company sells, including labor and materials.