In the Long Run, the Key Reason That Money Is

question 43

Multiple Choice

In the long run, the key reason that money is neutral is that

• A)the federal budget is balanced.
• B)prices are flexible.
• C)business cycles have become much milder.
• D)the nominal interest rate must equal the real interest rate.

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Definitions:

Operating Leverage

refers to the extent to which a firm utilizes fixed costs in its cost structure, influencing how changes in sales volume affect operating income.

Net Operating Income

This is a company's income after all operating expenses, excluding financial expenses and taxes, have been deducted from total revenue.

Operating Leverage

The degree to which a company's net income can be affected by a change in sales, influenced by the proportion of fixed costs in a company's cost structure.

Salesvolume

The total amount of a product sold within a specific period.