Changes in the Expected Rate of Inflation Will

question 44

Multiple Choice

Changes in the expected rate of inflation will:

• A)not shift but create a movement along the SRAS curve.
• B)shift the SRAS curve downward or upward.
• C)cause the SRAS curve to become vertical.
• D)cause the SRAS curve to become upward-sloping.

---

Definitions:

Net Income

The net income of a business following the deduction of all taxes and expenses from its overall revenue.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales volume, indicating how a change in sales will affect profits.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.

Contribution Margin Ratio

The percentage of sales that exceeds variable production costs, indicating how much of each sales dollar is available to cover fixed costs and generate profit.