Distinguish between physical capital and financial capital and give two examples of each
What will be an ideal response?
Physical capital is the actual tools, instruments, machines, buildings and other items that have been produced in the past and are presently used to produce goods and services. Financial capital is the funds that businesses use to acquire their physical capital. Examples of physical capital are the pizza ovens owned by Pizza Hut and the buildings in which the Pizza Huts are located. Examples of financial capital are the bonds issued by Pizza Hut to buy pizza ovens and the loans Pizza Hut has made to fund their purchases of new buildings.
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Classical macroeconomists argue that the short-run Phillips curve ________ represent a usable trade-off for policymakers because ________
A) does; people have rational expectations B) does; people do not have rational expectations C) does not; people do not have rational expectations D) does not; people have rational expectations
John K. Galbraith and Lester Thurow both believe that the modern corporation
a. follows the MR = MC rule b. tries to minimize costs c. hires too few managers d. is run by managers for managers e. serves the interests of stockholders
At a discount rate of 10 percent, what is the net present value of an investment expected to yield $1,000 per year (to be received at year end) for the next two years?
a. $1,859.41 b. $1,801.23 c. $1,735.54 d. $1,527.78
Research in the performance of developing nations with exchange rate pegs has shown that:
A) fixed exchange rates are 100% effective in curbing inflation and preventing hyperinflation. B) fixed exchange rates are 100% ineffective in curbing inflation and preventing hyperinflation. C) floating exchange rates are more effective in curbing inflation and preventing hyperinflation. D) fixed exchange rates are neither necessary nor sufficient to curb inflation and prevent hyperinflation.