Under Which of the Following Conditions Will a Change in Government

question 108

Multiple Choice

Under which of the following conditions will a change in government purchases have the greatest effect on the economy in the short run?

• A) The aggregate demand curve is relatively flat.
• B) The aggregate demand curve is relatively steep.
• C) The short-run aggregate supply curve is relatively flat.
• D) The aggregate demand curve is vertical.
• E) The short-run aggregate supply curve is vertical.

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Definitions:

Earnings Before Taxes (EBT)

A measure of a company's profitability that calculates income before the deduction of tax expenses.

Free Cash Flow

The sum of money a business produces once it subtracts the cash spent to sustain its operations and upkeep of its capital assets.

Operating Costs

Expenses associated with running a business's core operations on a daily basis, excluding the cost of goods sold.

Net Operating Working Capital

Net operating working capital is a financial measure that represents the difference between operating current assets and operating current liabilities.