Suppose You Found $1,000 Hidden in Your Mattress and Deposited

question 207

Multiple Choice

Suppose you found $1,000 hidden in your mattress and deposited it in a demand deposit account at your bank. If the reserve requirement was 20 percent, the deposit would directly create ____ in excess reserves and ultimately lead to a ____ total increase in the money supply, if all banks in the system lend out 100 percent of their excess reserves.

• A)​$800; $4,000
• B)​$800; $5,000
• C)​$1,000; $4,000
• D)​$1,000; $5,000

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Definitions:

Raw Materials

The basic materials that are processed or used in the manufacturing of goods, constituting the initial inputs in production.

Direct Costs

Expenses that can be directly traced to producing a specific good or service, such as raw materials and direct labor.

Indirect Costs

Costs that are not directly traceable to a specific product or service but are necessary for the business's overall operation.

Cost Object

An item for which costs are separately measured and assigned, such as a product, service, project, or customer.