In Addition to Consumption Being a Function of Income,suppose That

question 13

Multiple Choice

In addition to consumption being a function of income,suppose that it is also a function of interest rates.Now,lower interest rates make borrowing to consume easier,encouraging overall consumption.

• A)How would such a change impact the shape of the IS and LM curves? AD curve?
• B)How would such a change impact the effectiveness of monetary and fiscal policy? Multiple-Choice Questions:

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Definitions:

Reorder Point (ROP)

The inventory level at which an order should be placed to replenish stock before it runs out, ensuring a balance between stock availability and minimal holding costs.

Lot Size

The quantity of items processed or procured in a single order or batch, affecting inventory levels and production efficiency.

Periodic Review

A systematic evaluation of a process or system at regular intervals to ensure it meets certain standards or goals.

Safety Inventory

Additional inventory kept to protect against variability in demand or supply, ensuring that stockouts are minimized.