In a Mixed Economy, If the Government Share of GDP

question 76

Multiple Choice

In a mixed economy, if the government share of GDP is 20 percent, then the sum of the nongovernment shares will, in equilibrium, equal 80 percent because of

• A)government rules.
• B)adjustments in GDP.
• C)adjustments in the price level.
• D)adjustments in interest rates.
• E)adjustment in the unemployment rate.

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Definitions:

Profitability Index

A financial metric that measures the relationship between the present value of future cash flows and the initial investment.

Conventional Cash Flows

Cash flow patterns characterized by an initial outlay or investment followed by a series of positive returns, commonly seen in traditional investments.

Required Return

The minimum expected return by investors for investing in a particular security or project, taking into account the risk associated with it.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used to analyze the profitability of a projected investment or project.