Does it ever make sense to purchase a stock that has never paid a dividend? Explain
Yes. If a firm does not pay out its profits as dividends, it retains those earnings to invest in the firm. If its investments are good, they will increase the firm's future profits. The prospect of greater future profits raises the value of the stock. A good investment is simply one that increases the stock value by more than the amount of the forgone dividend. In general, stockholders are happy either with profits now or with a rising stock price.
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An increase in investment causes the price level to ________ in the short run and ________ in the long run
A) decrease; increase B) increase; increase further C) increase; decrease D) decrease; decrease further
In Chapter 10, the variable N can be regarded as total population, workers, work-hours, or "effective" work-hours, all proxies for each other if they are assumed to grow at the same rate
To define (Y/N) as the standard of living, N is particularly regarded as A) total population. B) workers. C) work-hours. D) "effective" work-hours.