Assume That the Banks Do Not Hold Any Excess Reserves

question 9

Multiple Choice

Assume that the banks do not hold any excess reserves and the reserve ratio is 20%. If Sarah deposits $5,000 in cash in her checking account, the money supply can potentially increase by:

• A)$20,000.
• B)$25,000.
• C)$5,000.
• D)$1,000.

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Definitions:

Operating Cost

Expenses associated with the ongoing operations of a business, such as rent, utilities, and payroll.

Useful Life

The expected period during which an asset is deemed to be functional and economically viable for its intended purpose, important for depreciation calculations.

Kilometres Per Litre

A measure of fuel efficiency in vehicles, indicating how many kilometers a vehicle can travel on one litre of fuel.

Supply Chain Metrics

Quantitative measures used to assess the performance and efficiency of supply chain operations, including aspects like delivery times, costs, and inventory levels.