If the Public Does Not Believe the Government's Claim That

question 139

Multiple Choice

If the public does not believe the government's claim that it will pursue low inflation policies, and the government then goes ahead and adopts an expansionary policy as the public expected, then

• A)the IA line will shift up after the AD curve shifts right.
• B)the IA line will shift down after the AD curve shifts right.
• C)real GDP will increase.
• D)the IA line will shift up before the AD curve shifts right.
• E)the IA line will shift down before the AD curve shifts right.

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Definitions:

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments by finding the interest rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Projects

Specific tasks or programs undertaken to achieve a goal, often characterized by defined scope, resources, and timeframe.

Average Accounting Return

A measure used to evaluate the profitability of investments, calculated as the average net income of a project divided by its average book value.

Necessary Information

Essential data or facts required to complete a task, make an informed decision, or solve a problem.