Figure 24-4 -Refer to Figure 24-4. in the Figure Above, AD₁, LRAS₁

question 169

Multiple Choice

Figure 24-4
-Refer to Figure 24-4. In the figure above, AD₁, LRAS₁ and SRAS₁ denote AD, LRAS and SRAS in year 1, while AD₂, LRAS₂ and SRAS₂ denote AD, LRAS and SRAS in year 2. Given the economy is at point A in year 1, what is the actual growth rate in GDP in year 2?

• A) 2.5%
• B) 7.3%
• C) 8.0%
• D) 10.0%

Appreciate the psychological aspects influencing decision maker’s bias towards a selected option.

Recognize the necessary frame of mind to achieve objectivity in decisions.

Understand the process and challenges of fortifying an option during decision-making.

Explain the benefit of utilizing multiple teams to tackle the same problem and how it impacts decision quality.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period, used in capital budgeting to assess the profitability of an investment.

Simple Rate

A basic form of interest calculation representing a percentage of the principal amount over a certain period of time.

Payback Period

The payback period is the duration of time it takes to recover the cost of an investment. This metric is commonly used to assess the feasibility or profitability of a project.

Straight-Line Method

A method of calculating depreciation or amortization that allocates evenly the cost of an asset over its useful life.