According to Keynesian Analysis, If Households Intend to Save More

question 203

Multiple Choice

According to Keynesian analysis, if households intend to save more, they will

• A) ultimately spend more.
• B) cause jobs to increase because investment will increase.
• C) ultimately cause job losses.
• D) cause the GDP to increase because inflation will decrease.

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Definitions:

Optimal Capital Structure

The combination of debt and equity that minimizes a company's cost of capital and maximizes its value.

Debt

Debt is an amount of money borrowed by one party from another, typically involving repayment of the principal amount along with interest.

Operating Leverage

A metric assessing the impact of increased sales on operational earnings, revealing the balance between a firm's fixed and variable expenses.

EBIT

Earnings Before Interest and Taxes, a measure of a company's profitability that excludes interest and income tax expenses to show the business's core profitability.