Using the IS Curve

question 101

Multiple Choice

Using the IS curve
,in the long run,a¯ __________ and __________,so that
__________.

• A)equals one; ;equals zero
• B)is greater than one; ;is greater than zero
• C)equals zero; ;equals zero
• D)equals one; ;equals zero
• E)equals one; ;equals one

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Definitions:

Break-Even Point

The point at which total revenues equal total costs, meaning no profit or loss is incurred.

Fixed Costs

Expenses that do not change in proportion with the activity of a business, such as rent, salaries, and insurance.

Units

A measure of quantity, whether referring to the products manufactured, services provided, or another quantifiable resource.

Fixed Costs

Fixed costs are expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.