If There Is a Decrease in Autonomous Expenditure, the New

question 169

Multiple Choice

If there is a decrease in autonomous expenditure, the new AE curve is

• A)flatter than the original AE curve.
• B)steeper than the original AE curve.
• C)parallel and above the original AE curve.
• D)parallel and below the original AE curve.
• E)downward sloping.

---

Definitions:

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the market price of a stock by its earnings per share, indicating the dollar amount an investor can expect to invest in a company to receive one dollar of that company’s earnings.

Common Stock

Equity ownership in a corporation, with shareholders entitled to vote on corporate matters and receive dividends when declared.

Market Price

The present cost at which a product or service can be purchased or sold on the market.

Return on Total Assets

A measure of profitability that indicates how efficiently a company is using its assets to generate earnings.