Microeconomics,, 16th Canadian Edition

Figure 15-7 Investment, the Capital Stock, and the Real Interest Rate in Canada, 1965–2016 Long-Run Trends in the Capital Market ...

The annual flow of investment is quite volatile, although the accumulated capital stock grows more steadily; the real interest r ...

larger population implies more demand for goods and services, and thus greater investment demand by firms. A larger population, ...

Summary ...

15.1 A Brief Overview of the Capital Market LO 1 The demand for financial capital comes from firms’ need to finance their invest ...

15.2 Present Value LO 2 Since physical capital is durable, it delivers benefits to its owners over many years. As a result, firm ...

15.3 The Demand for Capital LO 3 Profit-maximizing firms will purchase capital up to the point at which the present value of the ...

15.4 The Supply of Capital LO 4 The economy’s supply of capital comes from households’ flow of desired saving. An increase in th ...

15.5 Equilibrium in the Capital Market LO 5 Equilibrium in the capital market is determined where the quantity of capital suppli ...

Key Concepts Physical capital and financial capital Present value and the interest rate A firm’s optimal capital stock The econo ...

Study Exercises MyLab Economics Make the grade with MyLab Economics™: All Study Exercises can be found on MyLab Economics™. You ...

Fill-in-the-Blank 1. Fill in the blanks to make the following statements correct. a. A firm’s demand for financial capital is de ...

in a in the economy’s supply curve for capital. c. An increase in expected future income leads to a(n) in current household spen ...

e. Technological improvements lead to a(n) in both the demand for and the supply of financial capital. As a result, technologica ...

Review 4. The following table shows how the present value of the future MRPs produced by each unit of capital changes as the fir ...

a. Notice that the present value of the MRP declines as more capital is used. What economic principle accounts for this? b. If a ...

projections are announced for Wintertown that show a booming economy for the next 5–7 years. How will this affect the future str ...

a. The existing reserves of a relatively small oil company. b. The total world reserves of an exhaustible natural resource with ...

correlation between actual investment and the interest rate.” Comment. ...

Problems 10. Each of the problems below provides practice with present value calculations. a. At an annual interest rate of 3.5 ...