The Planned Investment Function Shows That

question 87

Multiple Choice

The planned investment function shows that

• A) real gross investment falls as real NNP increases.
• B) a negative relationship exists between the level of planned investment and the interest rate.
• C) a positive relationship exists between planned consumption and planned investment.
• D) at higher levels of planned saving, planned investment increases.

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Definitions:

EBIT

EBIT, or Earnings Before Interest and Taxes, represents a company's profit figure that does not take into account expenses stemming from interest and income taxes.

Interest Expense

The cost incurred by an entity for borrowed funds over a period, typically presented in the income statement.

Financial Leverage

Utilizing borrowed funds to enhance the possible yield from an investment.

Long-Term Solvency

A measure of a company's ability to meet its long-term financial obligations and commitments, indicating financial stability over the long term.