-Refer to the Above Figure

question 36

Multiple Choice

-Refer to the above figure. The rational expectations hypothesis implies that an anticipated increase in aggregate demand from AD₁ to AD₂ will

• A)move the economy from c to b.
• B)move the economy from a to b.
• C)move the economy from a to c.
• D)will shift the aggregate supply (A
• S)curve to the right.

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Definitions:

Unlevered Cost

Refers to the cost a company would incur without the benefit or cost of debt financing.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity and preferred equity, which is used to finance its overall operations and growth.

Economic Expansion

A phase of the business cycle where the economy grows and increases in activity, marked by rising GDP, employment, and income.

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profitability that includes all expenses except interest and income tax expenses.