Explain the difference between "profitability" and "cash flow."
What will be an ideal response?
Some firms are borrowing constrained. Their only source of funds to buy investment is current profit. So, when current profit rises, those borrowing constrained firms increase investment. This summarizes how "cash flow" can affect a firm's investment decision. "Profitability" simply refers to how changes in the expected present value of future profits affect investment.
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If real GDP per person was equal to $2,000 in 1900 and grew at a 1 percent annual rate, what would be the value of real GDP per person 100 years later?
A. $2,210 B. $4,000 C. $20,000 D. $5,410
In the short run, all costs are fixed
a. True b. False
According to the Heckscher-Ohlin model:
a. a relatively labor scarce country produces labor intensive goods. b. the labor productivity varies across different countries. c. the technological advancement varies across countries. d. the taste and preference patterns of the consumers are not similar across the countries. e. a capital abundant country exports sophisticated, manufactured products.
When the price of yen in terms of dollars increases, Honda automobiles from Japan become cheaper to U.S. residents.
Answer the following statement true (T) or false (F)