A required reserve ratio of 7 percent gives rise to a simple deposit multiplier of 14.29.
<h3>What is reserve ratio?</h3>
The reserve ratio is the percentage of reservable liabilities which commercial banks must keep rather than lend or invest. This is a requirement set by the country's central bank, which is the Federal Reserve in the United States. It is also referred to as the cash reserve ratio.
Some key points related to reserve ratio are-
- The reserve requirement is the minimum amount of deposits that a bank must hold, and it is sometimes used interchangeably with the reserve ratio.
- Regulation D of the Federal Reserve Board establishes the reserve ratio.
- Regulation D established uniform reserve requirements with all deposit accounts with transaction accounts and necessitates banks to provide the Federal Reserve with regular reports.
- Suppose the Federal Reserve determined that the reserve ratio should be 11%. This means that if a bank has $1 billion in deposits, it must keep $110 million in reserve ($1 billion x.11 = $110 million).
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Answer:
A. $70,000
Explanation:
From the information given, we discover that
Gross profit from sporting goods business = $100,000
Subtract: other Expenses = 11500
Subtract: Building depreciation expenses (10000 × 55%) = 5500
Subtract: Mortgage Interest (10000 × 55%) = 5500
Subtract: Depreciation on vehicle used for business = 3000
Less: Utilities for Ground Floor = 4500
Net Self employment Income = $70,000
Note that 55% is used for ground floor, it is calculated as 100 - 45% used by tenant, therefore, for business purpose 55% will be taken.
Answer: A - $8,046
Explanation: Inventory valuation using the specific identification method is a method used in getting the actual stock cost at their specific purchase price at a specified time during the year.
Jan - 11 units @129 =1,419
Feb - 13 units @139 = 1,807
May - 6 units @149 = 894
Sept - 13 units @159= 2,067
Nov - 11 units @ 169= 1,859
Total = $8,046
