Other Things Being Equal, a Technological Change That Raises the Value

question 376

Multiple Choice

Other things being equal, a technological change that raises the value of marginal product of capital raises the rental rate of capital because the

• A) supply curve of capital shifts leftward.
• B) supply curve of capital shifts rightward.
• C) demand curve for capital shifts rightward.
• D) demand curve for capital shifts leftward.

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Definitions:

Amortization

The gradual reduction of a debt over a period of time through regular payments, which cover interest and principal.

Interest Expense

The cost incurred by an entity for borrowed funds, typically noted on the income statement as a non-operating expense.

Issued

Refers to securities, such as stocks or bonds, that have been made available for sale and have been purchased by investors.

Callable

Describes a financial security (e.g., a bond) that can be redeemed or "called" by the issuer before its maturity date under certain conditions.