For an Investment to Be Considered Autonomous, It Must

question 126

Multiple Choice

For an investment to be considered autonomous, it must

• A) be negatively related to the interest rate.
• B) increase as the level of income increases.
• C) include fixed components.
• D) be independent of the level of real disposable income.

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Definitions:

Variable Expenses

Costs that change in proportion to the activity or business volume.

Fixed Expenses

Costs that do not change in total despite fluctuations in business activity levels or volume, such as rent or salaries.

Percentage of Sales Approach

A method for forecasting financial needs based on a fixed percentage of projected sales, often used in budgeting and financial planning.

Profit Margin Percentage

A profitability ratio calculated by dividing net income by revenue, expressing the result as a percentage.