Assume the Economy's Consumption and Saving Schedules Simultaneously Shift Downward

question 85

Multiple Choice

Assume the economy's consumption and saving schedules simultaneously shift downward. This must be the result of

• A) an increase in disposable income.
• B) an increase in household wealth.
• C) an increase in personal taxes.
• D) the expectation of a recession.

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Definitions:

Gross Profit

The financial gain obtained after deducting the cost of goods sold from sales revenue, before subtracting any operating expenses.

Net Present Value

It's the calculation of the present value of all cash entering minus the present value of all cash exiting over a certain period.

Sales Quantity

The total number of units sold within a specific period.

Discounted Payback Period

The period of time it takes for an investment's cash flows, discounted back to the present value, to cover its initial cost.