When the National Activity Index Is at Zero,the Economy Is

question 167

Multiple Choice

When the National Activity Index is at zero,the economy is growing at _____ rates.Negative values imply _____ trends.Positive values imply that growth is _____ the long-term trend.

• A) rapidly;slowing;equal to
• B) slowly;accelerating;equal to
• C) historical;slowing;faster than
• D) historical;accelerating;slower than

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Definitions:

Degree Of Operating Leverage

A ratio that measures the sensitivity of a company's operating income to its sales volume, indicating how earnings are affected by sales changes.

Variable Expenses

Costs that change in proportion to the activity of a business, such as raw material costs, sales commissions, or delivery charges.

Fixed Expenses

Expenses that remain constant regardless of variations in the level of production or the volume of sales, like lease payments or wages.

Degree Of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales volume, indicating the impact of fixed costs on earnings.