ABC Corp. is considering an investment project that costs $500 today. It expects the project will yield income of $200 at the end of years 1, 2, and 3. The interest rate must be ________ for the firm to undertake the project.

Balanced budget multiplier (= +5 - 4 = 1. Thus the impact on economic equilibrium is exactly equal to the original change in government spending (and taxes). So we can say that ?Y = ?G.**)

What will be an ideal response?

Refer to the scenario above. Which of the following statements is true about the model's prediction?

A) The prediction can be applied to estimate the returns only for a limited number of years of additional education. B) The prediction is an approximate relationship and may not hold for everyone. C) The prediction cannot be verified empirically. D) The prediction is precise, exact, and accurate for the entire population.