Scenario 29-2. The Monetary Policy of Tazi Is Controlled by the Country's

question 69

Multiple Choice

Scenario 29-2.
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi.The local unit of currency is the taz.Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves,75 million tazes of excess reserves,have issued 7,500 million tazes of deposits,and hold 225 million tazes of Tazian Treasury bonds.Tazians prefer to use only demand deposits and so all money is on deposit at the bank.
-Refer to Scenario 29-2.Assuming the only other thing Tazian banks have on their balance sheets is loans,what is the value of existing loans made by Tazian banks?

• A)6,900 million tazes
• B)7,125 million tazes
• C)7,350 million tazes
• D)None of the above is correct.

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Definitions:

Variable Component

An element of cost or expense that varies directly with changes in production volume, business activity, or other drivers.

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted, indicating how much contributes to fixed costs and net profit.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating the amount each unit contributes to covering fixed costs and generating profit.

Degree of Operating Leverage

A financial ratio that measures the percentage change in operating income in response to a percentage change in sales.