When Part of a Bank Loan Does Not Return to the Banking

question 317

Multiple Choice

When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency,then the money multiplier ________ in size and the amount of money created by an open market operation ________.

• A)increases;decreases
• B)does not change;increases
• C)decreases;decreases
• D)increases;increases
• E)decreases;does not change

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Definitions:

Period Costs

Costs that are expensed in the period in which they are incurred, as opposed to being capitalized or allocated to the cost of goods sold.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and regulators, outlining revenue, expenses, assets, and liabilities.

Units

The individual elements or items produced or available in some quantity.

Variable Cost

Costs that change in proportion to the level of production or sales activity, such as raw material and labor costs.