If a Bank Receives an Additional Deposit of $50,000 and the Desired

question 434

Essay

If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent, what is the amount of new loans the bank can make?

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Definitions:

Cost Or Market

An accounting principle that states inventory should be recorded at either its historical cost or market value, whichever is lower.

Replacement Cost

The cost to replace an asset with another of similar quality and functionality at current market prices.

Cost Of Completion

the estimated total expense required to finish a project, product, or service, often used in budgeting and financial projection.

Normal Profit

The minimum profit necessary for a company to remain competitive in its market, covering its opportunity costs.