Everything Else Held Constant,changes in the Interest Rate Affect Planned

question 87

Multiple Choice

Everything else held constant,changes in the interest rate affect planned investment spending and hence the equilibrium level of output,but this change in investment spending

• A)merely causes a movement along the IS curve and not a shift.
• B)is crowded out by higher taxes.
• C)is crowded out by higher government spending.
• D)is crowded out by lower consumer expenditures.

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Definitions:

Required Returns

The smallest yield an investor predicts to receive from investing in a particular venture or asset.

Constant

A value that does not change.

Present Value

The present financial value of a sum of money to be received in the future or a series of cash flows, considering a specific return rate.

Annual Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits on a per-share basis each year.