In the Simple Keynesian Model, If Desired Investment Is Greater

question 226

Multiple Choice

In the simple Keynesian model, if desired investment is greater than desired saving:

• A) the multiplier effect will move the economy to a lower income level.
• B) income and output will rise.
• C) interest rates will fall.
• D) actual savings will fall as the economy moves to a lower output level.

Analyze different investment or loan options based on their effective interest rates.

Understand the concept of inflation and its effect on value over time.

Compute and compare effective annual rates for different compounding frequencies.

Understand and calculate the effective rate of interest for various compounding frequencies.

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Definitions:

Current Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with short-term assets.

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate sales revenue, calculated by dividing sales revenue by total assets.

Noncurrent Assets

Assets not expected to be converted into cash within one year or the operating cycle, including property, plant, and equipment.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.