The Overall Behavior of the Economy

question 158

Multiple Choice

The overall behavior of the economy

• A) is remarkably stable over time.
• B) differs over time as prices become increasingly flexible in the months and years following a shock.
• C) differs over time as prices become increasingly sticky in the months and years following a shock.
• D) is easily controlled and stabilized by government policy.

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Definitions:

Required Rate

The minimum rate of return on an investment that investors demand, taking into account the investment’s risk level compared to the risk-free rate of return.

Annual Cash Flows

The total amount of money being transferred into and out of a business, captured on a yearly basis, and used to assess the financial health of the entity.

IRR Cross-Over Rate

The rate of return at which two different investments have the same net present value; used in comparing project alternatives.

Annual Cash Flow

The net amount of cash and cash-equivalents moving into and out of a business in a given fiscal year.