The Desired Reserve Ratio Is 10%,and Originally There Are No

question 11

Multiple Choice

The desired reserve ratio is 10%,and originally there are no excess reserves in any bank.If the Bank of Canada buys $1 million of Canadian government securities from a bond dealer,and the dealer deposits the Bank of Canada's cheque in her bank,then

• A)the bank can make additional loans up to $1 million.
• B)the bank can make additional loans up to $900,000.
• C)the bank can make additional loans up to $90,000.
• D)the bank has to call in loans of at least $1 million.

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Definitions:

Direct Labour Costs

The total expenses associated with paying workers who directly manufacture a product or perform a service.

Prime Costs

These are the direct costs of manufacturing a product, including direct materials and direct labor.

Baker's Salaries

Compensation provided to bakers, who are skilled individuals responsible for baking bread, pastries, and other confectioneries.

Indirect Materials

Materials used in the production process that are not directly traceable to the finished product, such as lubricants for machinery.