Which of the following statements is correct? A. The lower the price level, the greater the...

Which of the following statements is correct?

A. The lower the price level, the greater the quantity of real GDP demanded

B. The higher the price level, the more the aggregate demand curve shifts rightward.

C. The lower the price level, the more the aggregate demand curve shifts rightward.

D. The lower the price level, the more the aggregate demand curve shifts leftward.

E. The price level does not effect the level of real GDP demanded.

Expert Solution

Ans. The lower the price level, the greater the quantity of real GDP demanded.

A lower price level makes the consumer wealthier and hence increases the consumption expenditure. Since real GDP is positively related to the consumption expenditure, the real GDP demanded also increases.

Rahul Sunny answered 2 years ago

Which of the following statements is CORRECT? a. The shorter the time to maturity, the greater...

Which of the following statements is CORRECT? a. The shorter the time to maturity, the greater the change in the value of a bond in response to a given change in interest rates, other things held constant. b. The time to maturity does not affect the change in the value of a bond in response to a given change in interest rates. c. You hold two bonds, a 10-year, zero coupon, issue and a 10-year bond that pays a 6%...

Which of the following statements is CORRECT? a. The tax-adjusted cost of debt is always greater...

Which of the following statements is CORRECT? a. The tax-adjusted cost of debt is always greater than the interest rate on debt, provided the company does in fact pay taxes. b. If a company assigns the same cost of capital to all of its projects regardless of each project's risk, then the company is likely to reject some safe projects that it actually should accept and to accept some risky projects that it should reject. c. Higher flotation costs tend...

Which of the following statements is CORRECT? a. Junk bonds typically provide a lower yield to...

Which of the following statements is CORRECT? a. Junk bonds typically provide a lower yield to maturity than investment-grade bonds. b. Senior debt is debt that has been more recently issued, and in bankruptcy it is paid off after junior debt because the junior debt was issued first. c. A company's subordinated debt has less default risk than its senior debt. d. A debenture is a secured bond that is backed by some or all of the firm's fixed assets....

) Which of the following statements are correct? a. A company anticipates a perpetual debt level...

) Which of the following statements are correct? a. A company anticipates a perpetual debt level of £12 million at an interest rate of 4%. If the company’s tax rate is 35%, the present value of the interest tax shields is higher than 4 million. b. An all-equity firm has a beta of 0.8. If the risk-free rate is 5% and the market risk premium is 4%, the WACC of the company is lower than 8%. c. According to the...

Which of the following statements regarding leases is CORRECT? A. Finance leases lower the debt ratio....

Which of the following statements regarding leases is CORRECT? A. Finance leases lower the debt ratio. B. A debit balance in the Leased Asset account on the balance sheet indicates an operating lease that is less than one year. C. Title is transferred to the lessee at the end of an operating lease term. D. If a lease does not meet one of the five criteria provided by U.S. GAAP guidelines, it is classified as an operating lease by default.

2. According to the textbook, which of the following statements is (are) correct? (x) The price...

2. According to the textbook, which of the following statements is (are) correct? (x) The price of loanable funds is the interest rate and the interest rate is determined by the forces of supply and demand in the loanable funds market. (y) The supply of loanable funds slopes upward because an increase in the interest rate provides an incentive for people to save more. (z) The demand for loanable funds slopes downward because a decrease in the interest rate provides...

Which of the following statements is (are) correct? (x) Price ceilings and price floors usually reduce...

Which of the following statements is (are) correct? (x) Price ceilings and price floors usually reduce the welfare of society because quantity demanded does not equal quantity supplied if the price control is binding. (y) The particular price that results in quantity supplied being equal to quantity demanded is the best price because it maximizes the welfare of buyers and sellers. (z) A result of welfare economics is that the equilibrium price of a product is considered to be the...

Which of the following statements concerning bonds is (are) correct? :I. Municipal bonds have lower yields...

Which of the following statements concerning bonds is (are) correct? :I. Municipal bonds have lower yields than Treasury bonds. :II. Low coupon bonds have higher yields than high coupon bonds. :III. General obligation bonds yield more than revenue bonds. :IV. Initially, callable bonds have higher yields than noncallable bonds. a. I and III only b. I and IV only c. I, III and IV only d. II and IV only

Which of the following statements is (are) correct?

10. which of the following statements is (are) correct?(x) When the government runs a budget deficit, investment is lower than it would be otherwise because interest rates are higher than they would be otherwise.(y) A reduction in the budget deficit would cause a shortage of loanable funds at the original interest rate, and as a result, interest rates would rise.(z) When the government runs a budget deficit, national saving is higher than it would be otherwise.A. (x), (y) and (z)B....

Which of the following statements is NOT CORRECT?

‏____ Which of the following statements is NOT CORRECT? a. When a corporation's shares are owned by a few individuals and are not traded on public markets, we say that the firm is "closely, or privately, held." b. "Going public" establishes a firm's true intrinsic value, and it also insures that a highly liquid market will always exist for the firm's shares. c. When stock in a closely held corporation is offered to the public for the first time, the...

Question