Figure 34-2

question 60

Multiple Choice

Figure 34-2.On the left-hand graph,MS represents the supply of money and MD represents the demand for money;on the right-hand graph,AD represents aggregate demand.The usual quantities are measured along the axes of both graphs.
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-Refer to Figure 34-2.Assume the money market is always in equilibrium.Under the assumptions of the model,

• A)the quantity of goods and services demanded is higher at P₂ than it is at P₁.
• B)the quantity of money is higher at Y₁ than it is at Y₂.
• C)an increase in r from r₁ to r₂ is associated with a decrease in Y from Y₁ to Y₂.
• D)All of the above are correct.

Realize the importance of expected future cash flows in the valuation of financial assets.

Understand the effect of changes in required rates of return on stock valuation using the dividend growth model.

Understand the core aspects of Porter's Five Forces Model and its application to evaluating competition.

Identify elements of the value chain analysis and its role in identifying a company's core competencies.

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Definitions:

Expectancy Theory

A motivational theory suggesting that individuals are motivated to act in certain ways based on the expectation that their actions will lead to desired outcomes.

Motivation

An inner drive that directs a person’s behavior toward goals.

Perception

The process by which a person selects, organizes, and interprets information received from his or her senses.