cee001:
....Find the total credit that the banking system can create if primary deposits is just N100.00 while the cash ratio is 20% A. N700.00 B. N600.00 C. 500.00 D.N400.00

thanks...pls b expecting more...now that the Jamb date is drawing near...thanks...

Martiyu:
The total amount of money created with a new bank deposit can be found using the deposit multiplier, which is the reciprocal of the reserve requirement ratio. In this case, the cash ratio. Multiplying the deposit multiplier by the amount of the new deposit gives the total amount of money that may be created.

The deposit is #100, the cash ratio is 20%, ie 20/100=0.2
The reciprocal of the cash deposit ratio is 1/0.2=5
Multiply that 5 by the initial deposit of #100,u get ur answer (5×100=500).

cee001:
Oh my...could u believe I couldn't arrive at any answer...Nowhere have I gotten this thing called deposit multiplier...You don't know how grateful I am...wow..BTW d answer u gave is correct according to my past question..more are coming bro..thanks..I am really learning

Martiyu:


Uwc bro, anyday. Glad that helped.

Mogten:

Your answers are spot on. Highly impressed. You studied economics?

Martiyu:


Smiles, m flattered... Yeah, I did.
Oh my bad! I had already asked if you are an aspiring Economist before I realized it's a different moniker that quoted me.
So, to put differently, what's your own 'concentration'?

Mogten:

Lol. You are welcome bro. I am a graduate of economics myself. Was just passing by. You seem very sharp.

cee001:
**Rushes in with a bottle of coke and groundnut and presents it** yes o...we are family...I salute my Chief Economists in the house...lol

Martiyu:


Wow... M so pleased to meet you, my learned colleague. but those mild encomiums are kinda making me feel more important than I really am. *grins*... Thanks

Which institution is your alma mater?

***modified***
Oh! Don't just pass by, pls stay with us, feel at home and make yourself comfortable

As is customary on here,

Cee001, bring a bottle of groundnut and coke let's welcome this dignitary ... Lol

Mogten:

Hehe so funny. I graduated from ABU. U? Groundnut and coke ke?! Bros eh, Shey u want make I purge? Cee001, abeg bring me just pure water instead, make we begin dey rationalise.

Martiyu:


lol, OK...water it is then .
Greatest ABUSITE...I just hope i'm ryt about that. I finished from UI.

Mogten:

Lol. You are very much right my brother. UI?! Should I run or stay? Hahahah... Now its obvious how u got so sharp. Professor Mrs Garba, that woman na fountain of knowledge. Bet she lectured u?

Martiyu:


Smiles, pls stay. Oh! Prof Garba, she is who u say she is. May I let you know that her husband is also a Prof? That usually get me thinking what level of knowledge would run in the family. The children would just v to sit up. Though she didn't lecture me, but she is one out of many.

Mogten:

Lol. Youre so funny. Her husband? Hehe, I know. Professor A.G Garba ... He was my lecturer. She does visit him in Zaria. He's a brain bro!

cee001:
Ok thanks do far... I bring again two questions as follows;
1.Which of the following is NOT a part of the fixed costs of a limited liability company? A. Interest on loans B. Rent on buildings C. Depreciation reserves D. Management expenditure E. Wages

2. By terms of trade ,we mean the A. ratio of exports to imports B. difference between exports and imports C. difference between current account and capital account D. index of export prices to import prices to import prices expressed as a percentage E. ratio of short-term capital movements to long-term capital movements

...I just want to be sure of the answers because that which I chose as answers to the both questions were wrong according to my past qst. answer...And I feel they got it wrong..

Martiyu:

Mehn... That's good to know. So, how is post school life like? What are you up to now? If I may ask.

MizyB:

Economics Gurus in the house, please we need to come back to this question.
I have checked two text books and i still think these are the answers, but that definitely doesn't mean am correct, more clarifications from you sirs
A.interest on loans aren't fixed.
A.Ratio of exports to imports.

Mogten:

Its restful almost just as much as its boring. As allowee no dey enter again. I am awaiting service ooo. U?

Mogten:

On the terms of trade one, D is the correct answer. This is because TOT is expressed as the ratio of exports prices to import prices, and not the ratio of exports to imports. Option A ignores the the underlining word, which is "prices", and as such borders on "quantities". And as for the fixed cost question, depreciation, interest, insurance, taxes and repairs are all ownership costs... And ownership costs are fixed costs. So, interest on loan is a fixed cost. Wages on the other hand are as variable as it can ever get. So, option E is the correct answer. Wages are operating costs. All operating costs can be varied.

Mogten:

On the terms of trade one, D is the correct answer. This is because TOT is expressed as the ratio of exports prices to import prices, and not the ratio of exports to imports. Option A ignores the the underlining word, which is "prices", and as such borders on "quantities". And as for the fixed cost question, depreciation, interest, insurance, taxes and repairs of machinery are all ownership costs... And ownership costs are fixed costs. So, interest on loan is a fixed cost. Wages on the other hand are as variable as it can ever get. So, option E is the correct answer. Wages are operating costs. All operating costs can be varied.

Mogten:

On the terms of trade one, D is the correct answer. This is because TOT is expressed as the ratio of exports prices to import prices, and not the ratio of exports to imports. Option A ignores the the underlining word, which is "prices", and as such borders on "quantities". And as for the fixed cost question, depreciation, interest, insurance, taxes and repairs of machinery are all ownership costs... And ownership costs are fixed costs. So, interest on loan is a fixed cost. Wages on the other hand are as variable as it can ever get. So, option E is the correct answer. Wages are operating costs. All operating costs can be varied.

Martiyu:

Currently undergoing the youth service scheme. Boring though, u can imagine how idle I'd be in a primary class that has a class teacher and what they converse I don't understand.
It's better imagined than experienced but hell! M experiencing that. Lol.... Counting down seriously and bracing up for what the outside world has got to offer..

Martiyu:


Need I say more ? U nailed it bro. I read your detailed explanation and literally doffed my head - as I had not a hat - for you.

MizyB:

i concur with the 1st one.
thank you for the illustration buh given that am an ignorant in economics ipso facto your signature; can you please explain why ownership costs are fixed and operational costs varies. Thank you sir

Martiyu:


Need I say more ? U nailed it bro. I read your detailed explanation and literally doffed my head - as I had not a hat - for you.

Mogten:

Operating costs are cost of goods or services that are used up in a production process. Goods such as fuel, fertilizer, wages etc... all form the operating costs. Operating costs vary because their prices depend on the behaviour of other factors. Put in other words, they are externally determined. Take for instance, the amount paid labourers as wages depends on the volume of output and its marketability. The higher the volume of output and its marketability, ceteris paribus, the higher will be the wages paid workers as remuneration and vice versa. Likewise the price of fuel depends upon its output, its market and the cost incurred in producing it. Seeing as market conditions often change, their prices fluctuate and are therefore not constant. Fixed costs on the contrary do not vary with the level of output or any external factor. Take for instance, I lent you N100,000 on a written agreement that you will pay me 10% interest on it per annum, regardless whether you make profit or losses, you ought to honor the agreement and pay me the said amount as at when due. Wages on the other hand, can be reduced to cut losses. I hope that was clear enough. Pardon my epistle.

cee001:
lol...funny u..*I doffed my head*

Martiyu:


Don't mind him... Hehehe
How is preparation... Are you good to go?