If Nothing Else Changes, a Higher Price Level

question 67

Multiple Choice

If nothing else changes, a higher price level

• A)increases the value of real money balances.
• B)leads to a proportionately higher nominal demand for money.
• C)leads to a proportionately lower nominal demand for money.
• D)decreases the value of nominal money balances.

Comprehend the relationship between firm financing strategies and cost of capital.

Identify the role of the tax rate in determining the WACC.

Understand the use and importance of the SML (Security Market Line) approach in estimating the cost of equity.

Acknowledge the impact of flotation costs on project financing.

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