Suppose That Autonomous Investment Level Is $100 Billion Per Year

question 51

Multiple Choice

Suppose that autonomous investment level is $100 billion per year.If income in the economy falls,

• A)the level of investment will increase
• B)the level of investment will decrease
• C)the quantity of investment demanded will increase
• D)the quantity of investment demanded will decrease
• E)investment spending will not change

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Definitions:

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Flotation Costs

The expenses incurred by a company in issuing new securities, including underwriting fees, legal fees, and registration fees.

New Equity

Funds that a company raises through the sale of new shares to investors, often used to finance business activities without incurring debt.

Growth Rate

The percentage change of a particular economic or financial indicator within a specific time period, indicating the rate at which a company, economy, or value is expanding or contracting.