If a Firm Has Twice as Much Equity as Debt $\rarr$

question 11

Multiple Choice

If a firm has twice as much equity as debt in its capital structure, then the firm has:

• A)75.0% debt
• B)66.7% equity
• C)40.0% debt
• D)33.3% equity Let x = % of debt
• Then 2x = % of equity
• And 3x = 100% \(\rarr\) x = 33.3%

---

Definitions:

Aggregate Output

The total value of all goods and services produced in an economy over a specific time period.

Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period at given prices.

Price Level

A measure of the average prices of goods and services in an economy at a given time.

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of all goods and services produced over a specific time frame.