Assume That Because the Government Cancels a Large Infrastructure Program

question 4

Multiple Choice

Assume that because the government cancels a large infrastructure program construction firms earn less and lay off workers. Consequently, the region where they live suffers from decreased sales. This story illustrates

• A) a reverse multiplier effect.
• B) an increase in aggregate demand.
• C) a negative technology shock.
• D) Each of these answers is correct.

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Definitions:

Capital Lease

A lease classified as an asset purchase for accounting purposes, where the lessee assumes some of the risks and benefits of ownership.

Lease Term

The period during which a lessee has the right to use an asset, as stipulated in a lease agreement.

Economic Life

The estimated period over which an asset is expected to be economically useful to one or more users.

Present Value

Present Value is the current worth of a future sum of money or stream of cash flows given a specified rate of return, reflecting the time value of money.