If Investment in Capital Equipment Requires Two to Three Years

question 23

Multiple Choice

If investment in capital equipment requires two to three years between conceptualization and start-up to production,then

• A)the gap between the desired capital stock and the existing capital stocks is closed slowly.
• B)a change in expected sales will not increase output.
• C)V* will be smaller than expected.
• D)All of the above are correct.

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Definitions:

Shares

Units of ownership interest in a corporation or financial asset, providing a proportionate claim on its assets and profits.

Stock Split

An action by a corporation where it splits its current shares into numerous shares, aiming to increase the shares' liquidity.

Stock Splits

A corporate action to increase the number of shares, thereby reducing the price per share without altering the company's market capitalization.

Stock Dividends

Dividends paid to shareholders in the form of additional shares of the company's stock, rather than cash.