A drawback in the use of sensitivity analysis in capital budgeting decisions is that it doesn't
A) permit evaluating alternative outcomes.
B) provide estimates of net present values.
C) assign probability values to outcomes.
D) consider different possible rates of discount.
C
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Use the following graph to answer the next question.
In the diagram, Qf is the full-employment output. An expansionary fiscal policy would be most appropriate and needed if the economy's present aggregate demand curve were at
A. AD0. B. AD1. C. AD2. D. AD3.
Investment in health and education
a. slows growth because it takes resources from growth-creating sectors b. is harmful because it encourages families to have children c. is beneficial because in improves the capabilities of the population d. is beneficial because it provides jobs for doctors and teachers e. none of the above
What is the marginal propensity to consume (MPC) and why is it important in predicting consumer behavior?