During the 1990s,interest Rates Became ________ Volatile Than in the 1980s

question 51

Multiple Choice

During the 1990s,interest rates became ________ volatile than in the 1980s because the Fed used open market operations to ________ shifts in the IS and LM curves.

• A)more,reinforce
• B)less,offset
• C)more,offset
• D)less,reinforce

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a firm can increase profits by increasing sales.

Degree of Operating Leverage

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

Modigliani-Miller Model

A theory on capital structure that suggests a firm's value is unaffected by its financing decisions under certain conditions.

Bankruptcy Costs

Expenses associated with the process of declaring bankruptcy, including legal fees, administrative fees, and any potential loss to creditors.