If expected inflation is 12 percent and the publicly regulated electric utility company is legally limited...
If expected inflation is 12 percent and the publicly regulated electric utility company is legally limited to a 10 percent rate of return, then we should expect a. expansion of electric power generating capacity. b. future power shortages. c. excess investment by the electric utility. d. increased investment by the utility.
Homework Answers
Correct option is (b).
Since rate of return is lower than expected inflation, real rate of return is negative, so electric companies will decrease production, causing a shortage.
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If expected inflation is 12 percent and the publicly regulated
electric utility company is legally limited...
If expected inflation is 12 percent and the publicly regulated electric utility company is legally limited...
If expected inflation is 12 percent and the publicly regulated electric utility company is legally limited to a 10 percent rate of return, then we should expect o o O a. expansion of electric power generating capacity. O b. future power shortages. O c. increased investment by the utility. O d. excess investment by the electric utility. O
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