In Figure 1

question 4

Multiple Choice

In Figure 1.9, the slope of the line between points L and M is

• A)1.20.
• B)0.80.
• C)0.75.
• D)0.67.

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Definitions:

Precautionary Motive

The desire to hold cash or other liquid assets to meet unexpected needs and financial emergencies.

Financial Slack

The availability of excess funds or resources in a company that allows for flexibility in operations, strategic investments, or weathering financial uncertainties without immediate financial stress.

Keynes

Refers to John Maynard Keynes, a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and economic policies of governments.

Transactions Reasons

The underlying motives or justifications for conducting financial transactions or business operations.