The Rate of Inflation Does Not Necessarily Increase During the Expansion

question 29

True/False

The rate of inflation does not necessarily increase during the expansion phase of the business cycle.

---

Definitions:

Operating Leverage (DOL)

A measure of how revenue growth translates into growth in operating income, indicating the fixed versus variable costs of a business.

Variable Cost

A cost that changes in proportion with the level of output or activity.

Fixed Costs

Business expenses that remain unchanged regardless of the level of production or sales activities, such as rent, salaries, and insurance.

Breakeven Volume

The quantity of output or sales at which total revenues equal total costs, resulting in no profit or loss.