The Larger the Simple Deposit Multiplier

question 89

Multiple Choice

The larger the simple deposit multiplier,

• A) the higher the required reserve ratio.
• B) the higher the discount rate.
• C) the larger the change in the money supply for a given change in deposits.
• D) the less likely the Fed will be to use its monetary policy tools.

---

Definitions:

Variable Costing

Accounting practice that integrates only variable cost elements of production (direct materials, direct labor, and variable manufacturing overhead) into the valuation of products.

Net Operating Income

The total profit of a company derived from its normal business operations, excluding expenses and revenues from non-operating activities.

Unit Product Cost

The total cost (both variable and fixed) associated with producing one unit of product.

Variable Manufacturing Overhead

Costs of manufacturing that vary directly with the level of production, such as utilities and materials.