Study Exercises

MyLab Economics

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Make the grade with MyLab Economicsâ„¢: All Study Exercises can be found on MyLab Economicsâ„¢. You can practise them as often as you want, and many feature step-by-step guided instructions to help you find the right answer.



1. Fill in the blanks to make the following statements correct.


a. A firm’s demand for financial capital is derived from its demand for __________.


b. A firm that decides to invest in additional machinery will __________its requirement for financial capital.


c. An increase in the marginal product of capital will lead firms to __________ their desired capital stock and therefore __________ their demand for financial capital.


d. An increase in the interest rate will __________ the present value of capital’s MRP and therefore __________ firms’ desired capital stock. The result will be a __________ in the quantity of financial capital demanded by firms.


e. An increase in capital’s MRP results in a in the economy’s investment demand curve, whereas an

increase in the interest rate results in a __________ the economy’s investment demand curve.


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