Along Any Given IS Curve

question 56

Multiple Choice

Along any given IS curve:

• A)tax rates are fixed, but government spending varies.
• B)government spending is fixed, but taxes vary.
• C)both government spending and taxes vary.
• D)both government spending and taxes are fixed.

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Definitions:

Expiration

The predetermined date on which an options or futures contract becomes void and the right to exercise it ceases.

Intrinsic Value

The inherent or true value of an asset, investment, or company, based on fundamental analysis, excluding market speculation.

Exercise Price

The predetermined price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock or other asset at a specified price within a specified time.