The Discount Rate Is

question 44

Multiple Choice

The discount rate is

• A)the interest rate charged by the Federal Reserve banks on loans to banking institutions
• B)the interest rate banks charge each other for loans
• C)the rate banks charge their best business customers
• D)the rate of discount that banks use to determine the true mortgage rate
• E)the fraction of deposits that banks hold as reserves

---

Definitions:

Variable Expenses

Costs that change in proportion to the level of activity within a business.

Contribution Margin

The amount by which the sales revenue of a product exceeds its variable costs, indicating how much contributes towards covering fixed costs and generating profit.

Break-Even Point

The point at which total costs and total revenues are equal, resulting in no net gain or loss for the business.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums, providing stability to a company's expenses.