If the Reserve Ratio Is 5 Percent,then $600 of Additional

question 2

Multiple Choice

If the reserve ratio is 5 percent,then $600 of additional reserves can create up to

• A)$30 of new money.
• B)$3,000 of new money.
• C)$12,000 of new money.
• D)None of the above is correct.

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Definitions:

Fixed Cost

Costs that remain constant regardless of the amount of output or sales, like lease payments, wages, and insurance fees.

High-Low Method

A technique used in cost accounting to determine variable and fixed costs based on the highest and lowest levels of activity.

Machine Hours

A measure of the amount of time a machine is in operation, used as a basis for allocating manufacturing overhead to products.

Electrical Cost

The expense incurred from the consumption of electricity by a business or home.