An Exogenous Fall in the Domestic Price Level Causes an Increase

question 115

Multiple Choice

An exogenous fall in the domestic price level causes an increase in real wealth and

• A)a fall in desired investment.
• B)a rise in desired consumption.
• C)a downward shift in the AE curve.
• D)a downward shift of the net export function.
• E)a fall in government purchases.

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Definitions:

Retention Ratio

The share of net income not disbursed as dividends to shareholders but rather reserved by the business for various uses.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in the form of dividends, compared to the portion reinvested in the business.

Percentage of Sales Approach

A method used in financial forecasting to estimate various elements of a financial statement as a percentage of forecasted sales.

Profit Margin

A financial metric that measures the amount of net income generated as a percentage of revenue, indicating how effectively a company can convert sales into net profits.