A firm should invest more if Tobin's q
(a) equals zero.
(b) is less than one.
(c) equals one.
(d) is more than one.
Answer: D
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FIN Chapter 6
- For a borrower, an increase in the real interest rate will lead to
- The substitution effect of a decrease in real interest rates is to cause a consumer to
- If Claudette gets a permanent increase in her income of $1000 per year, she saves an extra $200 this year and consumes an extra $800 this year. If the increase in income had been temporary instead of permanent, she would have saved _____ of the extra income.
- If Claudette gets a permanent increase in her income of $1000 per year, she saves an extra $200 this year and consumes an extra $800 this year. If the increase in income had been temporary instead of permanent, she would have saved _____ of the extra income.
- A curve that connects all the consumption combinations that yield the same level of utility is known as
- Rachel earns nothing during her learning period, 1100 during her working period, and nothing during her retirement period. She has initial assets of 300. The real interest rate is zero. Rachel is not allowed to borrow by the banks. Whenever possible,Rachel wants to smooth consumption between periods. How much will she save during her working period?
- David consumes 200 in the current period and 330 in the future period. The real interest rate is 10% per period. David's present value of lifetime consumption is
- A temporary supply shock, such as a drought, would
- An invention that raises the future marginal product of capital would cause an increase in desired investment, which would cause the investment curve to shift to the ________ and would cause the real interest rate to ________.
- If consumers foresee future taxes completely, a reduction in taxes this year that is accompanied by an offsetting increase in future taxes would cause
- A temporary decrease in government purchases would cause
- The saving-investment diagram shows that a higher real interest rate due to a leftward shift of the saving curve
- An increase in the expected real interest rate tends to
- Any change in the economy that raises desired national saving for a given value of the real interest rate will shift the desired national saving curve to
- An economy has government purchases of 1000. Desired national saving and desired investment are given by
- An economy has full-employment output of 5000. Government Purchases are 1000. Desired consumption and desired investment are given by
- When desired national saving equals desired national investment, what market is in equilibrium?
- Your firm has capital stock of $10 million and a depreciation rate of 15%. Gross investment is $3 million. How much is net investment?
- Your firm has capital stock of $10 million and a depreciation rate of 15%. Gross investment is $3 million. How much is net investment?
- In 2003, your firm's capital stock equaled $10 million, and in 2004 it equaled $15 million. The average depreciation rate on your capital stock was 20%. Net investment in 2004 equaled
- In 2003, your firm's capital stock equaled $100 million, and in 2004 it equaled $105 million. The average depreciation rate on your capital stock is 20%. Gross investment in 2004 equaled
- What is the difference between gross investment and net investment?
- Cummins, Hubbard, and Hassett studied the effects of taxes on investment by
- Cummins, Hubbard, and Hassett studied the effects of taxes on investment by
- Calculate the tax-adjusted user cost of capital of a machine that costs $10,000 and depreciates at a rate of 10%, when the real interest rate is 3% and the tax rate on revenue is 5%.
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