Use the Following Example to Answer the Following Questions

question 104

Multiple Choice

Use the following example to answer the following questions:
Imagine that Stella deposits $25,000 in currency (which she had been storing in her closet) into her checking account at the bank.Assume that this institution has a required reserve ratio of 25 percent.
-As a result of this deposit,what is the maximum amount the bank can hold as loans?

• A) $0
• B) $18,750
• C) $25,000
• D) $31,250
• E) $100,000

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Definitions:

Direct Labour

The labor costs directly associated with the manufacture of specific goods or services.

Variable Manufacturing Overhead

Indirect, fluctuating costs involved in the production process, such as utilities and maintenance, that are not directly tied to specific units produced.

Fixed Manufacturing Overhead

Costs related to manufacturing that do not vary with the level of production, such as factory rent, salaries of permanent staff, and depreciation of factory equipment.

Fixed Expenses

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.