Suppose Your Company Is in Equilibrium,with Its Capital Stock at Its

question 48

Multiple Choice

Suppose your company is in equilibrium,with its capital stock at its desired level.A permanent decline in the real interest rate now has what effect on your desired capital stock?

• A)raises it,because the future marginal productivity of capital is higher
• B)lowers it,because the future marginal productivity of capital is lower
• C)raises it,because the user cost of capital is now lower
• D)lowers it,because the user cost of capital is now higher

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Definitions:

Respondeat Superior

A doctrine in agency law under which a principal (employer) may be held liable for the wrongful acts committed by agents or employees acting within the scope of their agency or employment.

Agency Law

The legal principles governing the relationship between an agent who acts on behalf of another person or entity, known as the principal, and the extent of their legal authority.

Principal-Employer

The primary entity or individual who employs and is responsible for the actions of their workers or agents.

Wrongful Acts

Actions or conduct that are unlawful or infringe upon someone's rights.