What Effect Will the Combination of a Decrease in the Capital

question 45

Multiple Choice

What effect will the combination of a decrease in the capital stock and increasingly costly government regulations have on LRAS?

• A)It will shift LRAS to the left.
• B)It will shift LRAS to the right.
• C)It will leave LRAS unchanged.
• D)It will have an indeterminate effect on LRAS.

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Definitions:

Equity Method

A method of accounting for investments in which the investor recognizes income based on the proportionate share of the investee’s profit or loss.

Investment Account

An account held at a financial institution or brokerage that is used to hold securities, stocks, bonds, mutual funds, and other investments.

Proportionate Share

This refers to an investor's or shareholder's portion of profits, losses, or stock based on their percentage ownership in the company.