The Decision Rule for Making an Investment Is to Do $\Delta$

question 134

Multiple Choice

The decision rule for making an investment is to do so as long as:

• A) the marginal product of capital is positive (\(\Delta\)Q/\(\Delta\)K > 0).
• B) the marginal product of labor is positive (\(\Delta\)Q/\(\Delta\)L > 0).
• C) the marginal product of capital is greater or equal to the world real interest rate (\(\Delta\)Q/\(\Delta\)K \(\ge\) r*).
• D) the initial level of wealth is equal to zero.

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Definitions:

Self-protective Mechanisms

Psychological strategies employed by individuals to defend themselves against feelings of anxiety or guilt and to maintain self-esteem.

Tyranny of the Shoulds

A psychological condition where a person is overly governed by what they think they should do, often leading to stress and unhappiness.

Idealized Self-image

An often unrealistic image or perception of oneself that represents how one wishes to be rather than how one actually is, potentially leading to psychological distress when not matched with reality.

Married

The state of being united to a person in a consensual and contractual relationship recognized by law.