If R Is the Real Interest Rate, W Is the Real

question 11

Multiple Choice

If R is the real interest rate, w is the real wage, MPK is the marginal product of capital, and MPL is the marginal product of labor, which of the following conditions informs the profit-maximizing firm how much capital to invest?

• A) R = MPK
• B) R = w
• C) R = 0 and MPK= MPL
• D) MPK = MPL
• E) MPK \(\gt\) MPL if R \(\lt\) w

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Definitions:

Payables Policy

A company's set of guidelines or practices for managing its accounts payable, including terms of payment and prioritizing of payments.

Sales Policy

The strategic approach and guidelines a company follows for selling its products or services.

Operating Cash Flows

The cash generated by a company’s normal business operations.

Payment Obligation

A financial commitment that requires a party to pay a certain amount of money by a specified date.