Firms discount future profits at the interest rate r because
A) it is the interest rate on their debt.
B) it is the same rate as for households.
C) Ricardian equivalence holds.
D) it has to equal the marginal productivity of capital in equilibrium.
B
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The equation of exchange is an accounting identity that
a. relates the money supply to nominal GDP. b. equates the demand for money with the supply of money. c. relates the money supply to real GDP. d. accounts use to balance assets and liabilities.
Other things the same, which of the following is correct?
a. A decrease in the price level causes the dollar to appreciate. Aggregate demand shifts right. b. A decrease in the price level causes the dollar to depreciate. Aggregate demand shifts right. c. If speculators lose confidence in the American economy, the dollar appreciates. Aggregate demand shifts right. d. If speculators lose confidence in the American economy, the dollar depreciates. Aggregate demand shifts right.