The More Fixed Cost Financing a Firm Has in Its

question 99

True/False

The more fixed cost financing a firm has in its capital structure, the greater is its financial leverage and risk.

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Definitions:

Government's Budget Deficit

A situation where a government spends more than it earns in revenue over a specific period.

Federal Tax Revenues

Money collected by the government from taxes imposed on individuals and businesses that is used to fund public services and programs.

Deadweight Loss

The reduction in economic efficiency that happens when a good or service does not reach or cannot reach its equilibrium.

Efficient Tax System

A tax system that collects required revenue without excessive government borrowing, and does so in a way that does not impede economic growth.