Figure 4-7 -Using the Information Contained in the Figure Above, the Initial

question 56

Multiple Choice

Figure 4-7
-Using the information contained in the figure above, the initial equilibrium Y is 3500. If there is 500 of new fiscal stimulus and a constant money supply, Y will increase to ________ and the interest rate will ________.

• A) 4000; remain constant
• B) 4000; rise to 10%
• C) 4500; rise to 12.5%
• D) 5500; remain constant

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Definitions:

Profitability

The degree to which a business or activity yields profit or financial gain, typically assessed through ratios such as net profit margin.

Investment by Common Stockholders

The total capital contribution from shareholders who own common stock in a company.

Ratio

A quantitative relation between two amounts showing the number of times one value contains or is contained within the other.

Liabilities

Financial obligations a company owes to outside parties, such as loans, accounts payable, and bonds payable.