Consider the Simplest Macroeconomic Model, with a Closed Economy and No

question 71

Multiple Choice

Consider the simplest macroeconomic model, with a closed economy and no government. If we assume that desired investment is autonomous with respect to national income, then the investment function (which graphs desired investment against actual national income) will be

• A)negatively sloped.
• B)vertical.
• C)positively sloped and relatively steep.
• D)horizontal.
• E)positively sloped and relatively flat.

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Definitions:

Paid-In Capital

Funds raised by a company through the issuance of securities, reflecting the total amount of invested capital that shareholders have contributed directly.

Retained Earnings

Profits that a company keeps after dividends are paid, often reinvested into the business or used to pay off debt.

Preferred Stock

A type of stock that gives its holders preference over common stockholders in terms of dividends and claims on assets during liquidation.

Treasury Stock

Treasury stock is made up of shares that have been issued and subsequently bought back by the company that issued them, which decreases the number of shares available on the open market.