The Aggregate Consumption Function Is C = 1,000 + 0

question 252

Multiple Choice

The aggregate consumption function is C = 1,000 + 0.9Yd. If income is $3,600 and net taxes are $600, consumption equals

• A) 2,400.
• B) 3,400.
• C) 3,700.
• D) 4,000.

Define and calculate the payback period of a project.

Distinguish between mutually exclusive and non-mutually exclusive projects.

Describe the superiority of the NPV rule over the IRR rule in case of conflicting investment decisions.

Explain the concept and calculation of the internal rate of return (IRR).

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Definitions:

Complimentary

Refers to something provided for free or at no cost as a courtesy or bonus.

Shock

A sudden upsetting or surprising event or experience, or the physical and emotional reaction to such an event.

Curiosity

A strong desire to know or learn something, driving individuals to seek out new information and experiences.

Product

An item or service created through a process and offered in the market to satisfy a specific need or want.