If an Increase in the Z Factors Resulted in a Very

question 139

Multiple Choice

If an increase in the Z factors resulted in a very large change in the price level and a very small change in aggregate output

• A) then in the U.S. economy investment demand must not be sensitive to the interest rate.
• B) then the U.S. economy must have been on the very steep part of its short-run aggregate supply curve.
• C) then the U.S. economy must have been on the very flat part of its short-run aggregate supply curve.
• D) then the U.S. aggregate demand curve must be very steep.

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Definitions:

EPS

Earnings Per Share, a key financial indicator used to measure the profitability of a company, calculated as the net income divided by the number of outstanding shares.

Intrinsic Value

The inherent worth of an asset, distinct from its market value, based on its fundamental characteristics.

ROE

Return on Equity, a measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Required Return

The minimum expected return an investor demands for holding a particularly risky investment.