Investment

Question 1

FV

Answer 1

Question 2

Answer 2

Question 3

PV

Answer 3

Question 4

Answer 4

Question 5

Question 6

NPV

Answer 6

Question 7

Production firms

Answer 7

Rent capital they use to produce g+s

Question 8

Rental firms

Answer 8

Own capital, rent it to production firms

Question 9

Draw capital rental market
Profit Max

Answer 9

Question 10

Cobb Douglas production function

Answer 10

Question 11

Answer 11

Question 12

Question 13

Question 14

Question 15

Question 16

Investment tax credit

Answer 16

ITC reduces firms taxes by a certain amount for each dollar it spends on capital
Hence ITC reduces Pk which increases profit rate and incentive to invest

Question 17

Corporate income tax

Answer 17

Question 18

Tobins Q

Answer 18

Question 19

Answer 19

Question 20

Question 21

Financing constraints

Answer 21

Neoclassical theory assumes firms can borrow to buy capital but some firms face financing constraints: limits on the amounts they can borrow

Question 22