Refer to the Information Provided in Figure 24

question 349

Multiple Choice

Refer to the information provided in Figure 24.1 below to answer the question(s) that follow. Figure 24.1
-Refer to Figure 24.1. Suppose that the consumption function is C = 300 + 0.5Yd and taxes are $300 billion, at equilibrium the value of autonomous consumption is

• A) $400 billion.
• B) $300 billion.
• C) $200 billion.
• D) $100 billion.

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Definitions:

Leverage

In finance, leverage refers to the use of borrowed funds or debt to amplify potential returns on investment.

Optimal Structure

The most efficiently arranged composition of an entity or process to maximize performance or outcomes, often used in the context of financial capital structure or organizational design.

Operating Leverage

A measure of how revenue growth translates into an increase in operating income, indicating the extent to which a company can increase profitability by increasing sales.

Financial Leverage

The use of borrowed funds in an attempt to increase the returns to equity.