Answer:
Commercial banks, required reserve, loans, deposits, create.
Explanation:
The main function of commercial banks is to accept deposits and then to lend the same money (minus required reserves) back out. Banks make a profit by charging a higher interest rate on loans than the interest rate they pay on deposits. Through the loan process, banks are actually able to create money.
The major function of commercial banks is
1. Accepting deposits from people and business organzations.
2. Giving loans to Customers to be paid at a specific period of time at an agreed interest rate.
Required reserve is the minimum amount of money which in required for a commercial Bank to hold/save out of every deposit. If the required reserve is 10% of every deposit, a customer customer deposited $100. The required will be $10 which the bank will hold. The remaining $90 is the balance which banks can loan out to Customers.
Commercial Banks make profit by charging a higher interest rate on loan and lower interest rate on deposits. For example: 7.5% interest rate on loan and 2.5% interest rate on deposits. The 5% difference is the bank Profit.
Answer:
Amount of credit created by commercial bank = 47,840
Explanation:
Given:
Total deposit in bank = 80,000
Reserve requirement = 8%
Withdrawal = 35%
Find:
Amount of credit created by commercial bank
Computation:
Amount available for withdrawal = Total deposit in bank[1 - Reserve requirement]
Amount available for withdrawal = [80,000][1-8%]
Amount available for withdrawal = 73,600
Amount of withdrawal = Amount available for withdrawal[35%]
Amount of withdrawal = 73,600[35%]
Amount of withdrawal = 25,760
Amount of credit created by commercial bank = 73,600 - 25,760
Amount of credit created by commercial bank = 47,840
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Answer:
The corporation's tax liability is $ 228,820.
Explanation:
To calculate tax liability we first have to find net profit. Detail calculation is given below.
<u><em>Net profit Calculation</em></u>
Sales $ 3,130,000
cost of goods sold and the operating expenses ($ 2,080,000)
Interest expense ( $ 377,000)
Net profit $ 673,000
<u><em>Tax liability Calculation</em></u>
Income fall under Tax bracket of 34% ($75,001 to $10,000,0000 for corporate tax. No additional surtax will be charged as income do not fall under its net.
Tax liabilty = 673,000 * 34% = $ 228,820
Explanation:
Is the answer C if not please explain