If the Economy Is Shrinking, Firms with High Operating Leverage

question 46

Multiple Choice

If the economy is shrinking, firms with high operating leverage will experience

• A) larger decreases in profits than firms with low operating leverage.
• B) similar decreases in profits as firms with low operating leverage.
• C) smaller decreases in profits than firms with low operating leverage.
• D) no change in profits.

---

Definitions:

Concept

A general idea derived from specific instances, serving as a fundamental building block for theories and arguments.

Animal

A living organism that feeds on organic matter, typically having specialized sense organs and nervous system and able to respond rapidly to stimuli.

The Statue of Liberty

A colossal neoclassical sculpture on Liberty Island in New York Harbor, symbolizing freedom and serving as a welcome to immigrants arriving from abroad.

Referent

The actual thing or entity in the world that a word or phrase identifies or denotes.