When a Change in the Price Level Leads to a Change

question 93

Multiple Choice

When a change in the price level leads to a change in the interest rate and thus a change in the quantity of aggregate demand,it is called the:

• A) interest rate effect.
• B) wealth effect.
• C) savings effect.
• D) output effect.
• E) price effect.

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Definitions:

Investment Date

The specific date on which an investment was made or acquired, which is important for calculating holding periods, interest, dividends, and capital gains.

Capital Investment Analysis

The process of evaluating the advisability of investing in long-term assets, based on potential returns.

Present Value

A rephrased definition denoting the current value of a future amount of money discounted at a particular rate of return.

Internal Rate of Return

A financial metric used to evaluate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows from a particular project equal to zero.