The equation 
:
A) is the capital arbitrage equation.
B) states that a firm should invest in new capital until the marginal product of capital is equal to the difference between the real interest rate and the growth rate of the price of capital.
C) states that if the real interest rate is zero, arbitrage equation states the marginal product of capital is equal to minus the capital gain.
D) states that if a firm has "too much" capital, it should divest of some of its capital stock.
E) All of these answers are correct.
Correct Answer:
Verified
Q1: In the arbitrage equation, a profit-maximizing firm
Q2: In the equation Q4: For the profit-maximizing firm, if the real Q5: One reason we are interested in investment Q6: In 2006, investment _ from about _ Q7: If the real interest rate is 4 Q8: If the real interest rate is 4 Q9: If R is the real interest Q10: During recessions _ disproportionately to _. Q11: In macroeconomics, investing includes purchases of:
A) taxes
A) roads.
B)
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