The Following Question Are Based on the Following Diagram

question 62

Multiple Choice

The following question are based on the following diagram:

-An equilibrium level of output and an equilibrium price level occur

• A) only when the aggregate supply curve is horizontal.
• B) when the price level equals the level of national output.
• C) as long as the aggregate demand curve slopes upward.
• D) where the aggregate supply and demand curves intersect.
• E) in the short run only with specific government intervention.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, demonstrating the proportion of fixed versus variable costs a company has.

Fixed Costs

Expenses that remain constant regardless of how much is produced or sold, including rent, salaries, and insurance costs.

Accounting Break-Even

The point where total sales equal total expenses, and the company makes no profit but also incurs no loss.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up over a period.