Banks Are Able to Create Money Only When

question 15

Multiple Choice

Banks are able to create money only when

• A)interest rates are above 2%.
• B)the Fed sells U.S.government bonds.
• C)the reserve ratio is 100%.
• D)only a fraction of deposits are held in reserve.

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Definitions:

Average Fixed Costs

The total fixed expenses of a business divided by the quantity of units produced, decreasing as production increases.

Variable Costs

Variable Costs are expenses that change in direct proportion to the volume of output or activity in a business, such as materials and labor.

Average Fixed Costs

The fixed costs of production (costs that do not change with the level of output) divided by the quantity produced.