In the Short Run, with Fixed Prices and No Imports

question 392

Multiple Choice

In the short run, with fixed prices and no imports and no income taxes, an increase in investment of
$100 billion

• A) decreases real GDP because of the decrease in induced expenditures.
• B) increases real GDP by less than $100 billion.
• C) increases real GDP by more than $100 billion.
• D) increases real GDP by $100 billion.

Comprehend the effect of changes in dividends, growth rates, and required returns on stock values.

Identify the tax implications of dividends for individuals and corporations.

Determine the effects of corporate dividend policies on stockholder wealth.

Understand the assumptions and limitations of the constant dividend growth model.

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Definitions:

Marginal Cost

The heightened expense incurred by fabricating an extra unit of a product or service.

Average Total Cost

The overall expense of manufacturing, including both fixed and variable costs, divided by the amount of product made.

Extra Unit

Refers to an additional quantity of a good or service, often used in the context of calculating marginal costs or benefits.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity produced, indicating the cost per unit of output.