Holding All Else Constant,in the Short Run,a Decrease in the Money

question 69

Multiple Choice

Holding all else constant,in the short run,a decrease in the money supply can cause:

• A) a decrease in unemployment.
• B) a high rate of inflation.
• C) an increase in the price level.
• D) a decrease in real gross domestic product (GDP).
• E) an increase in real GDP.

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Definitions:

Constant-Growth DDM

A valuation method that estimates the value of a stock by using its expected dividends, which grow at a constant rate indefinitely.

Intrinsic Value

The actual, inherent value of an asset, without respect to market value or external factors.

Market Capitalization Rate

A rate that represents the return expected by investors on a security or a portfolio, typically reflective of the risk and growth prospects.

Earnings Retention Ratio

The earnings retention ratio, also known as the plowback ratio, measures the percentage of net earnings a company retains to reinvest in the business, as opposed to distributing to shareholders as dividends.