Consider a Simple Macro Model with Demand- Determined Output

question 75

Multiple Choice

Consider a simple macro model with demand- determined output. In such a model, the multiplier is larger, the

• A)lower the APC.
• B)flatter the slope of the AE function.
• C)higher the level of autonomous expenditures.
• D)lower the level of autonomous expenditures.
• E)steeper the slope of the AE function.

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Definitions:

Capital Budgeting

The process of evaluating and selecting long-term investments compatible with the firm's goal of wealth maximization.

NPV

Short for Net Present Value, which is a financial metric used to evaluate the profitability of an investment or project, considering the time value of money.

IRR

Internal Rate of Return - a financial metric used to evaluate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Salvage Value

The estimated residual value of an asset at the end of its useful life, often considered in depreciation calculations and asset disposal decisions.