The Simple Money Multiplier Is Defined as

question 83

Multiple Choice

The simple money multiplier is defined as

• A)the reciprocal of the interest rate
• B)1/required reserve ratio
• C)excess reserves plus required reserves
• D)the reciprocal of the federal funds rate
• E)the reciprocal of the discount rate

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Definitions:

Fixed Expenses

Overheads such as rent, employee salaries, and insurance that do not fluctuate with changes in sales or manufacturing volumes.

Contribution Margin Per Unit

The selling price per unit minus the variable cost per unit, indicating how much contributes to covering fixed costs and profit.

Operating Income

The profit realized from a business's operations after deducting operating expenses such as wages and cost of goods sold.

Contribution Format

A type of income statement that separates fixed and variable costs to highlight the contribution margin.