In the IS Curve, Consumption Is Represented as a Constant

question 55

Multiple Choice

In the IS curve, consumption is represented as a constant fraction of ________, and, therefore, is ________ than current output.

• A) potential output; more volatile
• B) potential output; smoother
• C) short-run fluctuations; smoother
• D) short-run fluctuations; more volatile
• E) the interest rate differential; smoother

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Definitions:

Pre-tax Profit

The income that a company has earned before any taxes have been deducted from this amount, also known as earnings before tax.

Cost of Goods Sold

represents the direct costs attributable to the production of the goods sold by a company, including material, labor, and overhead costs.

Other Revenue

Income derived from activities not central to a business's primary operations.

Consolidated Income Statement

A financial document that summarizes the combined income and expenses of a parent company and its subsidiaries.