The Degree of Operating Leverage Measures the Sensitivity of Operating

question 2

True/False

The degree of operating leverage measures the sensitivity of operating income to changes in the level of output.

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Definitions:

APS

Average Propensity to Save (APS) is the ratio of total savings to total disposable income, indicating the portion of income that households save rather than spend.

Total Saving

The total amount of income saved by individuals, businesses, and the government, not spent on current consumption.

Disposable Income

The amount of income left for an individual or household after paying all taxes, available for spending, saving, or investing.

Autonomous Consumption

The level of consumption that occurs when income is zero, showing the basic level of consumption necessary for survival.