Which of the Following Statements Is False

question 56

Multiple Choice

Which of the following statements is false?

• A) The Fed has the legal authority to create money out of thin air.
• B) There is a direct relationship between the money supply and the required reserve ratio.
• C) The Fed can cause money to disappear into thin air.
• D) The federal funds market is a market in which banks can borrow money from other banks.

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Definitions:

CVP Analysis

Short for Cost-Volume-Profit Analysis, a tool used to determine how changes in costs and volume affect a company's operating income and net income.

Contribution Margin Ratio

The ratio of sales income that surpasses variable expenses, showing the extent to which revenue assists in covering fixed costs and generating profit.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Operating Leverage

The degree to which a company can increase its profits by increasing sales, reflecting how fixed costs are leveraged against sales volume.