The Mechanism That Normally Coordinates What Goes on in an Economy

question 134

Multiple Choice

The mechanism that normally coordinates what goes on in an economy is the

• A) stock market.
• B) price system.
• C) government.
• D) Federal Reserve.

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Definitions:

Fixed Costs

These are expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Economy Strong

A state wherein an economy is experiencing robust growth, low unemployment, and increasing levels of consumer spending and business investment.

Operating Leverage

Operating leverage describes the degree to which a company can increase its profits by increasing sales, reflecting the proportion of fixed costs to variable costs.

Sales Decrease

A reduction in the volume or value of sales within a company during a specific period compared to a previous period.