In the Aggregate Expenditures Model, It Is Assumed That Investment

question 125

Multiple Choice

In the aggregate expenditures model, it is assumed that investment

• A) automatically changes in response to changes in real GDP.
• B) changes by less in percentage terms than changes in real GDP.
• C) does not respond to changes in interest rates.
• D) does not change when real GDP changes.

---

Definitions:

Net Cash Flow

The difference between a company's cash inflows and outflows over a period of time.

Taxable Income

Taxable income is the portion of an individual's or corporation's income used to determine how much tax they owe to the government in a specific period.

Operating Costs

Expenses associated with the day-to-day functioning of a business, excluding financing costs and taxes.

Income Tax Rate

The income tax rate is the percentage at which individual or corporate income is taxed by the government.