Figure 14-1 -Refer to Figure 14-1. If the Economy Starts at C

question 5

Multiple Choice

Figure 14-1
-Refer to Figure 14-1. If the economy starts at C and there is an increase in aggregate demand, what happens to the economy in the long run?

• A) It moves to D and then back to C.
• B) It moves to B and then to A.
• C) It moves to D and then to A.
• D) It moves to B and then back to C.

---

Definitions:

Bias Towards Liquidity

A preference or inclination for holding or investing in liquid assets, usually due to concerns about future cash needs or market volatility.

Project Analysis

The process of evaluating the financial and operational implications of a proposed project or investment to determine its viability and expected returns.

Net Present Value

An economic indicator for assessing an investment's gainfulness, which involves the deduction of the present value of cash expenditures from the present value of cash receipts over a certain period.

Minimally Required

The least amount that is necessary or allowed, especially in the context of financial or regulatory requirements.