The Long-Run Aggregate Supply Curve Shifts Left If

question 79

Multiple Choice

The long-run aggregate supply curve shifts left if

• A)the capital stock increases.
• B)there is a natural disaster.
• C)the government removes some environmental regulations that limit production methods.
• D)None of the above is correct.

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Definitions:

Cost of Capital

The rate of return that a company must earn on its project investments to maintain its market value and attract funds.

Capital Budgeting

The process of planning and managing a company's long-term investments in major projects or assets.

Mutually Exclusive Projects

Projects where acceptance of one automatically excludes the acceptance of the other due to competing resources.

IRR

Internal Rate of Return; a metric used in capital budgeting to estimate the profitability of potential investments, representing the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.