A displacement reaction occurs when a more reactive element displaces a less reactive element from a compound that contains the less reactive element. 

The given statement is True.

A displacement reaction occurs when a more reactive element displaces a less reactive element from a compound that contains the less reactive element. After a displacement reaction, the less reactive element is now pure and left uncombined. 

For example-

$\mathrm{Fe} + {\mathrm{CuSO}}_4\to {\mathrm{FeSO}}_4 + \mathrm{Cu}$

Fe= Highly reactive

Cu=Less reactive