EBK MACROECONOMICS (FOURTH EDITION)
4th Edition
ISBN: 9780393616125
Author: Jones
Publisher: YUZU
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Question
Chapter 17, Problem 6E
(a)
To determine
The result of an increase in the total factor productivity and investment on the desired capital stock.
(b)
To determine
The effect of an uptick in the total factor productivity and investment.
(c)
To determine
The effect of an improvement in the total factor productivity on investment in the long run.
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Explain the short-run and long-run effects of an exogenous decrease in investment by explanation and using graphical analysis.
Looking at business fixed investment, elaborate on why investment is negatively related to theinterest rates.b. Using the Tobin’s q theory, elaborate on the relationship between investment and capitalstock?c. If the market value of firm A is $1.5 million and the replacement cost of capital is $450,000, find the Tobin's q.d. Should the firm replace capital? Elaborate on your response.
2. What would be the impact of changing the determinant variables given in the first column (below) on investment?
Factors affecting Investment
Effect on Investment
decrease in interest rate
Increase in interest rate
Increase in prices of capital goods
There is no technology available in the country
Demand for consumer goods decrease
Government decided to increase corporation tax
Increase in Subsidies
Chapter 17 Solutions
EBK MACROECONOMICS (FOURTH EDITION)
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