If Firms Became More Optimistic About the Future of the Economy

question 49

Multiple Choice

If firms became more optimistic about the future of the economy, which of the following occurs?

• A)The saving decreases and the supply of loanable funds curve shifts leftward.
• B)The quantity of investment demanded decreases and there is a movement up along the demand for loanable funds curve.
• C)Investment demand decreases and the demand for loanable funds curve shifts leftward.
• D)Investment demand increases and the demand for loanable funds curve shifts rightward.
• E)The quantity of investment demanded increases and there is a movement down along the demand for loanable funds curve.

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Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit contributes to covering fixed costs.

Variable Cost Per Unit

The cost that varies directly with the level of production or sales volume; it increases as production increases and decreases as production decreases.

Selling Price Per Unit

The amount of money charged for each unit of a product or service.

Target Profit

The amount of profit that a company aims to make in a certain period.