If a Bank Desires to Hold No Excess Reserves, the Reserve

question 273

Multiple Choice

If a bank desires to hold no excess reserves, the reserve requirement is 5 percent, and it receives a new deposit of $1,000

• A)its required reserves increase by $50.
• B)its total reserves initially increase by $1,000.
• C)it will be able to make a new loan of up to $950.
• D)All of the above are correct.

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Definitions:

Product Differentiation

A marketing strategy that involves distinguishing a product or service from others, to make it more attractive to a particular target market.

Marginal Revenue

The increase in earnings a business gets by selling one extra unit of its goods or services.

Marginal Cost

The cost added by producing one additional unit of a product or service, a crucial concept for decision-making in business and economics.

Variable Costs

Costs that vary directly with the level of production or output, such as raw materials and labour costs.