When the Inflation Rate Decreases, PAE ______, Which in Turn

question 79

Multiple Choice

When the inflation rate decreases, PAE ______, which in turn causes Y to ______ because of ______.

• A)rises; rise; the income-expenditure multiplier
• B)rises; fall; the income-expenditure multiplier
• C)falls; rise; the wealth effect
• D)falls; fall; the wealth effect

---

Definitions:

Financial Performance

An indicator of how well an entity can use assets from its primary mode of business and generate revenues.

Residual Income

A measure of performance that calculates the income an investment generates above the minimum required return.

Net Operating Income

A measure of a company's profitability, calculated by subtracting operating expenses from operating income.

Average Operating Assets

The average value of the assets used in the normal operations of a business over a specific period, typically used in return on investment calculations.