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Discuss the Neoclassical Framework as It Relates to Decision Making

Question 5

Essay

Discuss the neoclassical framework as it relates to decision making on Chinese investment:
a. Provide the neoclassical framework for investment and link that to the traditional cash flow Net Present Value approach.
b. Discuss whether the approach in (a) is applicable to China. Is it more relevant for some sectors instead of others? Which sectors of the economy?
c. Why are the questions in (a) and (b) vitally important for China in the coming years?

Correct Answer:

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a. (from Macro Finance Insight 6.1):
wh...

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