Scribd Logo
Upload

Welcome to Scribd!

  • M&T CH - 19

    Uploaded by

    Sheng Groen
    7 views5 pages

    Original Title

    M&T Ch_19

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    Download as pdf
    7 views5 pages

    M&T CH - 19

    Uploaded by

    Sheng Groen

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    Download as pdf
    of 5
    cuapter TM Investment Questions for Review 1. Tn dh mectmial mal of hosnem fn inventeny Soe wil Gd it proable to ‘tia ‘The real ronal prin depanda onthe manna pads of cpt wrens the ‘oat of capital depends em the rea intrest rato, tho dapreation rats, nd velative peo eaplal gods ‘Tobin gi the rain ofthe markt value of nlalled opt ta it replacment cot fae Iq is reator than ono, then the sok market aloe sale etal at more than cota tarps Thi rats a incentive ive, onues manag arise the markt value af Ue” stack by buying mare eal. Canary i Tae {han ne, then the lock market woe inal ep ees an replacement ‘nvestment I tho marginal rodst a xpi! teowds te ot of epitope then installed epital sev profit. These profs mako the firms desebe to own, ie raises the market vale of ese rms stock, Impl ahigh vlueof q Hence, ‘Tobi g captares the fcenive to tweet becaune it rfc the corent snd expected futnr oobi apt ‘A inte in the ite a ons toa dscreage in resent fvestnen bases ‘reduces housing dean. Many peopl ake oat oatengu to parce hl homes fn oe nthe inert rat Intec the eat af the loan. Bven fr people who donot ‘Erte by bn, the ntereat ate meanurea te poral cat of tlding thet ‘well showing enter ban ping tt he bane igor 101 shows the eee ofan incre in Uh ntereat rate on eesidetil ‘shown in Figure 191A) This nase he rltve price of housing to fal nd shown, ‘in Figure 1°10, dhe lower lative ple ot housing dcreaso eidental vestnet o o rat 4 Reawans why rms might hol inventor inde 2 "Production smoothing. fr ay hold inventories to smcoth the lvl af pro- tetion aver ime: Rather han adjust production to match fntatons in es, ‘may be cheaper to praduce gods at nortant rte, Hane, the Bem Sree nonorie wh els a lows ecrenon ham when slo or igh 1, Inventories as a fetae of produetlon. Holding inventor yal fm to ‘porate mae fiinly Pr example, «eal stare my Had lavatories so that {Eile ha gods avaiable to show customer, A'manufacarng in may bold invention of pure pra foros Ue ne an anery Ene a ut dows Wht ‘machin bre, ‘© Slockcontavoldanes. A frm may hod inventories to ved ning ut of geade ‘whan sree ae expectedly high, ime often havo make prodetion deans Tate knowing how mush ester wil demand. 1 damand exsads production ‘there are no invent, the good Wil bu out of tak for peo, and the 4 Work in process. Many goods roquire a numberof steps in production snd, ‘hover, take tino fo preduee. Whon a product i not completely nish, ts fomtpanetsareesuntd as patos inventory. Problems and Applications ‘there ar several reat why investment might depend on natin income. ‘int fom the neslasial made! f basins fed Investient we know that fn ncraze in amplaymentincrases tho marginal proud of capt Hons, i ‘onl seam ie high because amplyment eases thn to MPR shih ‘rma havea inoentve ose. Second, fms fee inane constraint, then sn incense in eurent profile icrsse the aut that fs eae to nv ‘Third, ineronsn in income rie owing derad, which ocracas he prin of Insusing nad, Bef, the lvl of rede nvortnen. Four the ace {or mole of inventories plo tant when sop ree cme wah had mere [neat hie may be bneuso inventories ae het of production or bese fra wih to ald stokout a Inthe Keynelan ern inde of Chapter 11, we aarumed that T= We found {he grvertmentpurchaas ull hy entidering an nereasa in goverment fxpenditare of AC. The imimadate fl So un inereate In nce of 40. Tis ‘crease in income ote ennui ose by MPC % AG. Theos in en ‘tmptonineenees expenditure and income one gui. Tie process entice Inet eo tho ulimit fen ince AY 24011 ¢mpe + per mpe +} cil -MPcaG. nc, the government pending multiplier we and in Chapt 1 aviag = 1k MPC Now supats tht investment also depends an income, that =a. As ‘wor, neronsa in goverment expendtare hy AC inally increas income "Thiel increase in nome enacos oneampion ase MPC % AC 0, {talib causes investment to incteao by oA This irae in eonsption nd Inveslnntincetace expenditure and inom oes agun. The proces cnt A= AGL impo + +impe a) ope +a...) (ait-MPC—0)40. Hones, the goverment porchaes mliptier comes AYIG=141-MPC-a). Procuig these wa, we nd thatthe tax multi benmes AYIAT =~ MPR MPC ahi See aii me rer whe vent depends ‘The gorernment-puchatee multiple in the Keynesian eres le ue ow out Dp oon to change in governmetprthone, fr gon itera rae ‘hereto if tls os ho mc tne 1 rv sft an espana a change ferment poehaces I investment depends on bath Income a th intaest ‘a en and npn) ta he air ager, oat wo ka he ‘hae The shown in igure 10° by he hi from 1; fo 5 ai -rc-«) rom the figure, its clea that national income and the interac rte inert. ince Income 8 higher, soaumption higher aa al We canna tell hte invectrent reno he igor inert rate tends © make invest Mon at, wheres the higher national some ends a ake invest Inthe sandard mal wher lve doped oly on ths interetrae sm incense i goverment pres unambiguously eas investment to fll ‘Thats goverment purchase “owd out Investment Ta ix oc aieease in government purchaser might Snalaudinevagoinveetnent inthe thor ran ‘Beno the temparary expansion. {6 Cansidr tho Slow grovth model fom Chapa 4 and 5. The Slow mod hows tat. ‘he seving Yo fon hey deerinant of tho stndy-state capa sk Ho tx laws ‘courage Investment In housing but disonrage investment in borne eapital, tis Impl that the rac f aarp devoted to sien nvetan ewe Bocuse of the tas eoacoquences igure 1D show Ue ecm ofthe Slaw ddl aw and high ening roe AL the lower saving rate, busincae opt por ork iad ase ‘utp power i ale lower. Th he ta stem distorts the eons choice ‘usin output versus housing “Amalie wa to Sc this eect sto tink of she Tabour market, With les

    You might also like