The Business Cycle Occurs Because Aggregate Demand and Aggregate Supply

question 221

True/False

The business cycle occurs because aggregate demand and aggregate supply change at uneven rates.

---

Definitions:

Levered Firm

A company that has debt in its capital structure, implying that it has taken on borrowing to finance its operations or growth.

Unlevered Firm

A business or company that operates without any debt financing, meaning it does not have any borrowings in its capital structure.

M&M Proposition I

A theory in corporate finance that asserts that the market value of a company is independent of its capital structure.

Homemade Leverage

refers to the strategy wherein investors adjust the amount of leverage or debt in their investment portfolios on their own, rather than relying on the borrowing strategy of the companies in which they invest.