A firm's decision to invest in a project is based on the
A) real interest rate and expected total revenue.
B) nominal interest rate and expected total revenue.
C) nominal interest rate and the expected profit.
D) real interest rate and the expected profit.
D
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Pepsi is considering an expensive advertising campaign to steal market share from Coca-Cola. Why might both companies have a dominant strategy to advertise, even if advertising attracts few new customers to the cola drink industry?
According to the textbook, for most goods and services-foods, beverages, entertainment, etc.-the income elasticity of demand is:
A. larger in the short run than in the long run. B. larger in the long run than in the short run. C. about the same in the short run and in the long run. D. is difficult to differentiate from the short run to the long run.
The balanced budget multiplier says that
A. An increase in government spending paid for by a tax increase of equal size has no effect on aggregate demand. B. An increase in government spending must be paid for by a tax cut of equal size. C. An increase in government spending paid for by a tax increase of equal size shifts aggregate demand leftward. D. An increase in government spending paid for by a tax increase of equal size shifts aggregate demand rightward.
According to the law of demand, when the price of shoes ________, people will consume ________ shoes.
A. rises; more B. falls; the same amount C. rises; the same amount D. falls; more