Financial Accounting > QUESTIONS & ANSWERS > University of Texas - ECO 34730 Investment Theory Solutions. Solutions to Investment Theory Practice (All)
University of Texas - ECO 34730 Investment Theory Solutions. Solutions to Investment Theory Practice Problems
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Solutions to Investment Theory Practice Problems 1) Show graphically how an increase in the interest rate will affect the optimal capital stock and hence investment 2) Show graphically how a decrea... se in the depreciation rate will affect the optimal capital stock and hence investment. 3) Show graphically how an increase in animal spirits (SP), which increases the expected MPK, will affect the optimal capital stock and hence investment. 4) Suppose that there is a tax on the marginal product of capital of τ, so that the return to capital is now (1-τ)MPK. Derive the new user cost of equation. Show graphically how an increase in the tax on capital will affect the optimal capital stock and hence investment [Show More]
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