An Increase in the Expected Profitability of Investment Will Cause

question 19

Multiple Choice

An increase in the expected profitability of investment will cause

• A)IS to shift upward.
• B)IS to shift downward.
• C)LM to shift upward.
• D)LM to shift downward.

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Definitions:

Units Produced

The total number of finished products that a company manufactures during a specific period.

Variable Costing

A method of costing that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold and treats fixed manufacturing overhead as a period expense.

Absorption Costing

A method of accounting that encompasses all costs involved in manufacturing, including direct materials, direct labor, and both variable and fixed manufacturing overhead, as part of a product's cost.

Net Operating Income

The profit a company makes from its core business operations, excluding deductions of interest and taxes.