If Spending in an Economy Increases by 3% and Real

question 28

Multiple Choice

If spending in an economy increases by 3% and real GDP increases by 1%,the result will be:

• A) a recession.
• B) inflation.
• C) a positive supply shock.
• D) war.

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Definitions:

Year-End

The conclusion of a fiscal year when a company completes its accounting period, often used to finalize financial reports and assess annual performance.

Present Value

The present worth of a future amount of money or series of cash inflows, calculated using a given rate of return.

Annual Net Cash Flows

Annual net cash flows represent the amount of cash a company generates or loses within a year from its operating, investing, and financing activities.

Required Return

The minimum amount of profit or gain an investor expects to achieve from an investment to make it worthwhile.