If the Economy Is Falling Below Potential Real GDP,which of the Following

question 151

Multiple Choice

If the economy is falling below potential real GDP,which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in

• A)the money supply and a decrease in interest rates.
• B)government purchases.
• C)oil prices.
• D)taxes.

Determine the cost of new equity and the effect of flotation costs.

Analyze the impact of capital structure on WACC and company valuation.

Understand the difference between before-tax and after-tax cost of debt.

Calculate the required rate of return on preferred shares.