In the Long-Run ISLM Model and with Everything Else Held

question 58

Multiple Choice

In the long-run ISLM model and with everything else held constant,the long-run effect of an autonomous increase in investment is to ________ real output and ________ the interest rate.

• A)increase;increase
• B)increase;not change
• C)not change;increase
• D)not change;decrease

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Definitions:

Temporary Difference

A difference between the carrying amount of an asset or liability in the balance sheet and its tax base, which will result in taxable or deductible amounts in the future.

Book Income

The income of a business as reported in its financial statements, using the accounting methods and standards specified by the relevant authority.

Deferred Tax Liability

A tax obligation that a company owes but is not required to pay until a future date.

Warranty Expense

Costs that a company incurs to repair, replace, or compensate for faulty products during the warranty period.