Why Are Government Purchases Assumed to Be Autonomous

question 52

Multiple Choice

Why are government purchases assumed to be autonomous?  

• A) because they are independent of the price level 
• B) because they are independent of the level of real GDP 
• C) because they are independent of consumption 
• D) because they are independent of investment

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Definitions:

Book Value Per Share

A financial measure that calculates the per share value of a company based on common shareholders' equity in the business.

Assets

Resources owned or controlled by a business, entity, or individual with the expectation that they will provide future economic benefit.

Liabilities

Financial obligations or debts that a company or individual owes, which can include loans, accounts payable, mortgages, and other amounts due to third parties.

Constant-Growth DDM

A dividend discount model that assumes dividends grow at a constant rate indefinitely, used to estimate the value of a stock.