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 interest rate is equal to the inflation rate
B. the marginal revenue product of capital is equal to its rental cost
C. the return on capital is equal to depreciation
D. the marginal product of capital is equal to the marginal product of labor
Answer: B
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When the Fed purchases government securities,
A) required reserves in the banking system decrease, leading to fewer loans being made. B) required reserves in the banking system increase, leading to more loans being made. C) the monetary base does not change. D) excess reserves in the banking system decrease, leading to fewer loans being made. E) excess reserves in the banking system increase, leading to more loans being made.
The ratio of cash and securities to total assets is a traditional measure of __________ risk
A) credit B) leverage C) interest rate D) liquidity
Refer to Scenario 2.2. What is the effect of the BBP on the market for dental care?
A) Only the supply curve shifts. B) Only the demand curve shifts. C) Both the demand and supply curves shift. D) Neither the demand nor supply curve shifts.
Simultaneous causality bias
A) is also called sample selection bias. B) happens in complicated systems of equations called block recursive systems. C) results in biased estimators if there is heteroskedasticity in the error term. D) arises in a regression of Y on X when, in addition to the causal link of interest from X to Y, there is a causal link from Y to X.