What Should Be the Impact on Aggregate Expenditures from an Increase

question 94

Multiple Choice

What should be the impact on aggregate expenditures from an increase in the real interest rate?

• A) It should increase
• B) It should decrease
• C) It should remain constant
• D) The impact is indeterminate

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Definitions:

Strict Liability Rule

A regulation imposing absolute responsibility on certain persons or entities for damages or losses, regardless of fault or intention.

Squeeze-Out

A strategy used by majority shareholders to pressure minority shareholders into selling their shares, often at unfavorable terms.

Minority Shareholder

An investor who owns less than 50% of a company's shares, typically having limited influence over corporate decisions.

Business Judgment Rule

A principle that shields corporate executives from liability for decisions made in good faith and believed to be in the best interest of the company, even if they are ultimately unsuccessful.