In the Real Business Cycle Framework, a Technology Shock That

question 68

Multiple Choice

In the real business cycle framework, a technology shock that increases investment demand and the demand for loanable funds leads to a_________ quantity of saving and a _________real interest rate.

• A) lower; lower
• B) lower; higher
• C) higher; higher
• D) higher; lower

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Definitions:

Break-even Point

The juncture where total expenses match total income, resulting in neither a net profit nor a loss.

Fixed Expenses

Costs that do not change with the level of production or sales, remaining constant over a specified period.

Contribution Margin Ratio

A financial metric that measures the proportion of revenue remaining after variable costs have been deducted, indicating how much revenue is available to cover fixed costs and generate profit.

Fixed Expenses

Costs that do not change with the level of production or sales over a short period, such as rent, salaries, and insurance.