The Downgrade of U

question 93

Multiple Choice

The downgrade of U.S.federal debt created wild swings in the stock market.The uncertainty led to consumer caution and less spending.This is an example of the ____ dimension.

• A) legal
• B) sociocultural
• C) technological
• D) political
• E) economic

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Definitions:

Operating Leverage

A financial ratio that measures the degree to which a firm or project can increase operating income by increasing revenue.

Operating Income

The income earned from a company's day-to-day operations, calculated before taking into account interest and taxes.

Margin Of Safety

The difference between actual sales and break-even sales, providing a cushion against which sales can fall before a business incurs a loss.

Break-Even Point

The level of sales or production at which total revenues equal total expenses, resulting in no profit or loss for the business.