A government wants to build a hydroelectric dam to reduce flooding in a region and provide electricity to its people
What type of investment is this? In order to make a decision about whether or not to make the investment, how should the government evaluate this project?
A dam is an infrastructure or social investment. The government should estimate the expected returns from the dam over its lifetime and compare them to the expected construction costs by calculating a return on investment. If the return is greater than the opportunity cost, the government should build the dam.
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If the rate of inflation is zero, prices are expected to remain stable, and the nominal rate of interest is 5 percent, then the
A) real rate of interest is equal to the nominal rate. B) real rate of interest is less than the nominal rate. C) nominal rate is greater than the real rate of interest. D) investment demand schedule will shift upward.
In the short run, a monopolistically competitive firm
A) always earns positive economic profits. B) never earns positive economic profits. C) can earn positive, negative, or zero economic profits. D) always earns positive accounting profits.