Suppose There Has Been an Increase in Investment

question 76

Multiple Choice

Suppose there has been an increase in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

• A)increase;increase further
• B)increase;decrease to its initial value
• C)decrease;decrease further
• D)decrease;increase to its initial level

---

Definitions:

Severe Cash Flow

A situation where a business or individual experiences extreme difficulties in generating enough cash to cover operating expenses or meet financial obligations.

Liberal Credit Policy

A liberal credit policy is a financial strategy where companies extend credit terms to customers more freely, aiming to increase sales volume by allowing more flexible payment options.

Economic Order Quantity

A calculation used to determine the optimal order size that minimizes the sum of carrying costs and ordering costs in inventory management.

Inventory Costs

Costs associated with ordering, holding, and managing inventory, including storage, insurance, and obsolescence.