Required Reserves Represent

question 2

Multiple Choice

Required reserves represent:

• A) A leakage from the flow of money.
• B) The desire on the part of some banks to hold funds and not lend them out.
• C) Dollars that can be lent.
• D) A flaw in the banking system.

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Definitions:

Discounted Payback

A capital budgeting method that calculates the time required to recoup the investment in a project, by taking into account the present value of expected cash flows.

Financial Break-Even

The sales level that results in a zero NPV.

Contribution Margin

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

Accounting Break-Even

Accounting Break-Even is the point at which total revenues equal total expenses (including both fixed and variable costs), resulting in neither profit nor loss.