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Describe and explain what is meant by downward sticky wages and unemployment.
Interest Rate
The amount charged, expressed as a percentage of the principal, by a lender to a borrower for the use of assets.
Certainty Equivalent NPV
A method of valuing risky projects or investments by adjusting the expected cash flows to reflect the investor's risk aversion, providing a 'risk-free' net present value.
Cost of Capital
The minimum return on investment a business necessitates to uphold its market value and entice financial inflow.
Certainty Equivalent NPV
A method used to adjust the net present value (NPV) of an investment to account for risk, equating it to a certain but lower cash flow.
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