Saying a firm will continue investing up to the point at which ________ is equivalent to saying that a firm will keep investing in new capital up to the point where the expected rate of return is equal to the interest rate.
A. the return on capital is equal to depreciation
B. the marginal revenue product of capital is equal to its rental cost
C. the interest rate is equal to the inflation rate
D. the marginal product of capital is equal to the marginal product of labor
Answer: B
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Asymptotic distribution theory is
A) not practically relevant, because we never have an infinite number of observations. B) only of theoretical interest. C) of interest because it tells you what the distribution approximately looks like in small samples. D) the distribution of statistics when the sample size is very large.
Incentive compensation schemes are more likely to be value enhancing if:
A. they can accurately account for the dysfunctional behavior of the principal. B. they can minimize the administrative cost borne by the agent. C. they are designed to limit the agent's gaming behavior. D. they are designed to minimize the principal's average cost.
High profits in a particular industry indicate that consumers want more of that industry's goods.
Answer the following statement true (T) or false (F)
Domestic fiscal stimulus is more likely to lead to ________ when production is outsourced.
A. increased inflation B. decreased inflation C. increased imports D. decreased imports