Aging baby-boomers, predisposed to hearing loss because of years of listening to loud music, are now approaching the age range in which hearing loss starts to become apparent
What effect does this have on investment spending within the hearing aid industry? A) There will no longer be an opportunity cost associated with investment spending.
B) There will be no change in real investment spending, because hearing aid manufacturers will look only at the interest rate in determining whether to expand production.
C) The investment function relating planned real investment spending to the interest rate can be expected to shift rightward.
D) The investment function relating planned real investment spending to the interest rate can be expected to shift leftward.
The correct is C) The investment function relating planned real investment spending to the interest rate can be expected to shift rightward.
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Refer to Figure 2-2. Suppose Mendonca is currently producing 60 pounds of vegetables per period. How much meat is it also producing, assuming that resources are fully utilized?
A) 45 pounds of meat B) 75 pounds of meat C) 80 pounds of meat D) 100 pounds of meat
Constantine purchased 100 shares of IBM stock several years ago for $150 per share. The price of these shares has fallen to $55 per share. Constantine's investment strategy is "buy low, sell high"
Therefore, he will not sell his IBM stock until the price rises above $150 per share. If he sells at a price lower than $150 per share he will have "bought high and sold low." Constantine's decision: A) is correct and shows a solid command of the nature of opportunity cost. B) is incorrect because the original price paid for the shares is a sunk cost and should have no bearing on whether the shares should be held or sold. C) is incorrect because when the price of a stock falls, the law of demand states that he should buy more shares. D) is incorrect because it treats the price of the shares as an explicit cost.