-In the Above Figure, If the Economy Is Initially at Point

question 140

Multiple Choice

-In the above figure, if the economy is initially at point D, then if the Fed lowers the federal funds rate

• A) the supply of loanable funds decreases, the real interest rate falls, and the AD curve shifts rightward.
• B) other short-term interest rates fall, net exports increase, and the AD curve shifts rightward.
• C) the exchange rate rises, investment increases, and the SAS curve shifts rightward.
• D) the demand for loanable fund and supply of loanable funds both increase by the same amount so that the AD curve shifts rightward.

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Definitions:

Amortizations

The act of spreading out loan payments over a period of time, including both the principal and the interest.

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating the efficiency of a company in producing and selling its products.

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the value of the business's reputation, brand, and other unquantifiable elements.

Equity Method

An accounting method used to assess the profits earned by investments in other companies, where the investment's value is adjusted according to the investor’s share of the investee's profit or loss.