If the Real Interest Rate Is,more or Less,constant and the Growth

question 39

Multiple Choice

If the real interest rate is,more or less,constant and the growth rate of dividends falls sharply,

• A)the price-earning ratio would fall.
• B)the marginal product of capital would fall.
• C)firm profits would rise.
• D)stock prices would fall.
• E)both a and d

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Definitions:

Endowment

The total resources, including wealth, talent, or abilities, that individuals or institutions possess, which can influence their capacity to make economic decisions.

Alimony

Financial support paid by one ex-spouse to another after divorce, as ordered by a court.

Budget Line

A graphical representation that shows all possible combinations of two goods that a consumer can afford with their income level.

Net Seller

An entity or individual who sells more of a commodity, security, or other assets than they buy.