What Is the Effect of an Increase in the Current

question 11

Multiple Choice

What is the effect of an increase in the current price of an investment?

• A)The approximate expected yield will increase.
• B)The approximate expected yield will decrease.
• C)The approximate expected yield will remain the same.
• D)The average annual current income will increase.
• E)The average annual current income will decrease.

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Definitions:

Treasury Bankrupt

A situation where the government's treasury exhausts its funds, unable to meet its financial obligations.

Interest Payments

Payments made to lenders as a return on borrowed capital, typically expressed as a percentage of the principal.

Deficits

Occurs when an entity, typically a government, spends more money than it receives in revenue over a specific period, resulting in a shortfall that needs to be financed.

Inflationary Gap

The difference between the actual level of output in an economy and the output level needed to achieve full employment without inflation.