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Macroeconomics

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Moderate

Firm's Response to Drop in Current Capital

MACRO-4ABBET

If a profit-maximizing firm choosing its capital stock for the future, faces a disaster which destroys some of its current capital stock, it will…

A

invest less today and have a smaller capital stock in the future.

B

invest more today and have a smaller capital stock in the future.

C

invest less today and have a larger capital stock in the future.

D

invest more today and have a larger capital stock in the future.

E

invest less today and have an unchanged capital stock in the future.

F

invest more today and have an unchanged capital stock in the future.

G

invest the same amount today and and have a larger capital stock in the future.

H

invest the same amount today and and have a smaller capital stock in the future.