An investment should be undertaken if the present value of an expected stream of earnings from the investment exceeds the cost of the investment necessary to undertake it.
Answer the following statement true (T) or false (F)
True
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Which of the following is a reason why increases in the price level result in a decline in aggregate expenditure?
A) Price level increases in the United States relative to other countries raise net exports, which lowers aggregate expenditure. B) As the price level rises, government spending falls, which lowers aggregate expenditure. C) Price level increases cause firms and consumers to hold more money, which raises the interest rate. Higher interest rates lower consumption and planned investment expenditures, which lowers aggregate expenditure. D) Price level increases raise real wealth, which causes consumption spending and aggregate expenditure to decline.
If the price level increases, then there will be
a. a movement upward along the AD curve b. a downward movement along the AD curve c. an AD curve shift to the right d. an AD curve shift to the left e. an AS curve shift to the right
Which of the following is not implied by the quantity equation?
a. If velocity is stable and money is neutral, an increase in the money supply creates a proportional increase in nominal output. b. If velocity is stable and money is neutral, an increase in the money supply creates a proportional increase in the price level. c. With constant money supply and output, an increase in velocity creates an increase in the price level. d. With constant money supply and velocity, an increase in output creates a proportional increase in the price level.
What does an upward-sloping supply curve mean?
What will be an ideal response?