The Money Multiplier Is

question 405

Multiple Choice

The money multiplier is

• A) the amount by which a change in the quantity of money is multiplied to determine the change in the monetary base.
• B) the amount by which a change in the monetary base is multiplied to determine the change in the quantity of money.
• C) equal to bank reserves divided by the change in the monetary base.
• D) equal to bank reserves divided by the change the quantity of money.

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Definitions:

Sales

The transactions involved in selling goods or services in the normal course of business, generating revenue for the company.

DOL

Degree of Operating Leverage; a measure of a company's fixed costs as a percentage of its total costs, indicating how earnings before interest and taxes (EBIT) change in response to a change in sales volume.

Contribution Margin

The amount of revenue remaining after deducting variable costs, used to cover fixed costs and generate profit.

Variable Cost

Expenses that vary depending on the amount of products or services a company generates.