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14 Cards in this Set
- Front
- Back
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Capital goods, define
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Goods produced by the economic system that are used to produce other goods and services in the future.
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Major categories of physical/tangible capital
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(1) nonresidential structures
(2) durable equipment (3) residential structures (4) inventories |
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Social capital
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capital that provides services to the public
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Intangible capital
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includes human capital and goodwill
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the most important dimension of capital
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time; its value is only as great as the value of the services it will render over time
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the value of capital is only as great as what?
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the value of the services it will render over time
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most common measures of a firm's capital stock
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current market value of its:
(1) plant (2) equipment (3) inventories (4) intangible assets |
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investment, define
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creation of new capital
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depreciation, define
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decline in an asset's economic value
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capital income, define
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income earned on savings that have been put to use through financial capital markets
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capital income, forms
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(1) interest
(2) profits |
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the capital market exists to do what?
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direct savings into profitable investment projects
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Expected rate of return, factors
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(1) price of the investment
(2) expected length of time the project provides additional cost savings or revenue (3) expected amount of revenue attributable each year to the project |
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A perfectly competitive, profit-maximizing firm will keep investing in new capital up until what point?
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The point at which expected rate of return is equal to the interest rate.
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