The AD Curve Slopes

question 304

Multiple Choice

The AD curve slopes

• A) downward due to the wealth and price effects.
• B) downward due to the wealth and substitution effects.
• C) upward due to the price and substitution effects.
• D) upward due to the wealth and substitution effects.

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Definitions:

EPS

Earnings per share, a key indicator of a company's profitability, calculated as the company's net profit divided by the number of its outstanding shares.

DFL

Degree of Financial Leverage; a measure that shows how much a company's earnings per share (EPS) are affected by changes in its operating income, indicating the volatility of earnings.

Dividends Per Share

The amount of dividends paid to shareholders, divided by the number of outstanding shares of a company's stock.

Stock Price

The present rate at which a company's stock is bought and sold on the stock exchange.