FIGURE 23-1 -Refer to Figure 23-1.Assume the Economy Is Initially in Equilibrium

question 48

Multiple Choice

FIGURE 23-1

-Refer to Figure 23-1.Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V.The price level is P0.Now,suppose the AE curve shifts to AE2 and we move to a new equilibrium level of GDP at Y2 and point E on AD2.A possible cause of this change in equilibrium is

• A)an increase in government purchases.
• B)an increase in the net tax rate.
• C)a decrease in desired investment.
• D)a decrease in desired net exports.
• E)an exogenous fall in the price level.

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Definitions:

Undervalued Equipment

Equipment whose market value is higher than its book value or valuation on financial statements, suggesting it may be worth more than it appears.

Non-Controlling Interest

A share in the equity and profits of a subsidiary that are not owned by the parent company.

Goodwill Impairment

A write-down that occurs when the fair value of a company's goodwill asset is less than its recorded (carrying) cost, indicating a decline in the value of acquired businesses.

Net Increase

The difference between the current and previous period's amounts, indicating growth when positive.