A $2,000 Decrease in Investment Will Shift the Aggregate Expenditures

question 84

Multiple Choice

A $2,000 decrease in investment will shift the aggregate expenditures curve down by:

• A) exactly $2,000 and will decrease the equilibrium level of real GDP by exactly $2,000.
• B) exactly $2,000 and will decrease the equilibrium level of real GDP by less than $2,000.
• C) exactly $2,000 and will decrease the equilibrium level of real GDP by more than $2,000.
• D) less than $2,000 and will decrease the equilibrium level of real GDP by less than $2,000.

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Definitions:

Capital Structure

Capital structure is the mixture of debt and equity that a company uses to finance its operations and growth.

Coupon Rate

The yearly percentage yield from a bond, measured against its nominal value.

Market Price

The current price at which a service or asset can be bought or sold in the market.

CAPM

CAPM - Capital Asset Pricing Model, a formula used to determine the theoretical return on an investment by relating risk and the expected return, often used in the finance sector for pricing risky securities.