If There Is an Unanticipated Decrease in Aggregate Demand, Which

question 98

Multiple Choice

If there is an unanticipated decrease in aggregate demand, which of the following is most likely to occur?

• A) an increase in the price level
• B) a reduction in employment
• C) an increase in the growth rate of real GDP
• D) an increase in consumption

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Definitions:

Net Present Value

A method used in capital budgeting to analyze the profitability of an investment by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Present Value

The present value of a future amount of money or a series of cash flows, discounted by a certain rate of return.

Net Present Value Rule

A principle that states an investment should be made if the net present value of its cash flows, discounted at the hurdle rate, is positive.

Invest

The act of allocating resources, usually money, with the expectation of generating an income or profit.