If the Economy Is on the IS Curve,but Is to the Right

question 63

Multiple Choice

If the economy is on the IS curve,but is to the right of the LM curve,aggregate output will ________ and the interest rate will ________.

• A)rise;rise
• B)rise;fall
• C)fall;rise
• D)fall;fall

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Definitions:

Incremental Cash Flows

The additional cash inflows or outflows expected from a new project or investment, crucial for determining its net present value.

Capital Budgeting

The process of planning and managing a company's long-term investments in projects and assets, to maximize returns and shareholder value.

Incremental Cash Flows

The additional cash flow a company receives from taking on a new project, excluding any cash flows not directly attributable to the project.

Cash Expense

Expenses that require immediate outlay of cash during an accounting period.