Suppose a new cost-saving device will forever generate $1,000 net savings per year to a firm. The device costs $10,000. Using the Internal Rate of Return approach, will the firm make the investment?

This Application examines the concept of

A) sticky prices. B) consumer spending habits. C) stagflation. D) the wealth effect.

A shift in tastes toward American goods ________ net exports in the U.S. and causes the quantity of aggregate output demanded to ________ in the U.S., everything else held constant

A) decreases; rise B) decreases; fall C) increases; rise D) increases; fall