The minimum level of net investment necessary to maintain the stock of capital depends on
A) the rate of interest and the size of the capital stock.
B) the rate of depreciation and the size of the capital stock.
C) the corporate profits tax and the interest rate.
D) business confidence and the corporate profits tax.
B
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One problem with using monetary policy to address "bubbles" in asset markets is that:
A. monetary policy is well-suited for addressing the problem of inappropriately high asset prices. B. reducing the real interest rate to deal with the bubble could lead to inflation. C. the Federal Reserve is not interested in stabilizing output. D. doing so presupposes that the Federal Reserve is better than financial-market professionals at identifying bubbles.
In the context of the environment, the type of transactions costs that includes overseeing the amount of pollution being emitted once bargaining has taken place and a bargain has been reached and ensuring that the agreed to bargain is being carried
out are called A) search costs. B) collectivization costs. C) negotiation costs. D) monitoring and enforcement costs.
The __________ problem in the market for used cars is capable of collapsing the market for __________.
A. adverse selection; good used cars B. adverse selection; lemons C. moral hazard; good used cars D. moral hazard; lemons
Equilibrium in the market for funds occurs when the
a. lenders and borrowers are mutually satisfied at some interest rate. b. marginal revenue product of investment using the funds equals the interest rate. c. demand curve for funds and the supply curve for funds intersect. d. All of the above are correct.