Comparing Tobin's Model of the Speculative Demand for Money with Keynesian

question 5

Multiple Choice

Comparing Tobin's model of the speculative demand for money with Keynesian speculative demand

• A)both models imply that individuals hold only money or only bonds.
• B)the Keynesian model implies individuals diversify their asset holdings,while the Tobin model predicts that individuals hold only money or only bonds.
• C)the Tobin model implies individuals diversify their asset holdings,while the Keynesian model predicts that individuals hold only money or only bonds.
• D)both models imply that individuals diversify their asset holdings.

Be able to define and calculate the average rate of return and understand its significance.

Understand the concept of the cash payback period and how to calculate it.

Distinguish between net cash flow and net discounted cash flow.

Calculate the expected average rate of return for capital investments.

---

Definitions:

Flexible Budget

A flexible budget that adapts to variations in activity levels or volumes, promoting precise budgeting and forecasting.

Manufacturing Costs

Expenses directly associated with the production of goods, including labor, materials, and overhead.

Direct Materials

The primary raw inputs used in the manufacture of products, which are directly traceable to the production process.

Factory Depreciation

The allocation of the cost of a manufacturing or production plant and its equipment over their useful lives, reflecting the usage and wear and tear of fixed assets.