An Increase in the Demand for Investment Goods Causes

question 26

Multiple Choice

An increase in the demand for investment goods causes

• A)a decrease in real interest rates.
• B)an increase in real interest rates.
• C)a decrease in the real wage.
• D)a leftward shift of the output demand curve.
• E)a rightward shift of the output demand curve.

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Definitions:

Variable Expenses

Costs that change in proportion to the level of production or sales activity.

Contribution Margin Ratio

A financial measure that gauges the proportion of sales revenue that exceeds variable costs, indicating how much revenue contributes towards covering fixed expenses and generating profit.

Variable Expenses

Costs that change in direct relation to changes in business activity levels, such as production or sales volume.

Fixed Expenses

Costs that do not vary with the level of production or sales, remaining constant over a specified period of time.