Consider the Relationship Between the AE Curve and the AD

question 72

Multiple Choice

Consider the relationship between the AE curve and the AD curve.A rise in the amount of desired investment expenditure at each level of national income

• A)causes a movement along the AD curve.
• B)causes a movement along the AE curve.
• C)causes a shift of the AE curve but no movement of the AD curve.
• D)shifts the AD curve to the left.
• E)shifts the AD curve to the right.

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Definitions:

Average Rate of Return Method

A method of evaluating capital investments by calculating the average annual profit expected from the investment and dividing it by the initial investment cost.

Present Value

The contemporary valuation of a future money sum or cash flow series, based on a predetermined return rate.

Time Value

The idea that having money now is more valuable than having the same sum in the future because of its ability to generate earnings.

Money Concept

A financial principle that emphasizes the role of currency in transactions and as a measure of value in the economic system.