A Lower Interest Elasticity of Investment Demand Leads to a

question 13

Multiple Choice

A lower interest elasticity of investment demand leads to a

• A)steeper IS curve.
• B)flatter IS curve.
• C)steeper LM curve.
• D)flatter LM curve.

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Definitions:

Long Run

A period in economics during which all factors of production and costs are variable, allowing for the full adjustment to changes.

Fixed Cost

Expenses that do not change with the level of output production, such as rent, salaries, or equipment leases.

Output

The quantity of a product or service produced within a given period by a company, sector, or economy.

Long-Run Average Total Cost Curve

A graphical representation showing how the average total cost of production varies with output level in the long run, when all inputs are variable.