Operating Leverage Primarily Affects the Left-Hand Side of the Balance

question 87

True/False

Operating leverage primarily affects the left-hand side of the balance sheet, while financial leverage affects the right-hand side of the balance sheet.

---

Definitions:

Flexible Wages

A wage system where pay rates can easily adjust in response to changing economic conditions, such as supply and demand for labor.

Aggregate Demand

The total demand for all goods and services within a country's economy at a given overall price level and in a given time period.

Aggregate Supply

The total supply of goods and services that firms in an economy plan to sell during a specific time period at various price levels.

Keynesian Range

A segment of the Keynesian theory where demand-pull inflation is unlikely to occur due to high levels of unemployment and underused resources.