Suppose the monetary-policy rule has the wrong natural rate of interest. that is, the central bank follows this rule: it = pit + p' + thetapi(pit - pi*t) + thetay(yt - yt) where p' does not equal p, the natural rate of interest in the equation for goods demand. the rest of the dynamic ad-as model is the same as in chapter. solve for the long-run equilibrium under this policy rule. explain in words the intuition behind your solution.

Which of the following statements is correct? stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns. potential conflicts between stockholders and bondholders are increased if a firm's bonds are convertible into its common stock. takeovers are most likely to be attempted if the target firm’s stock price is above its intrinsic value. one advantage of operating a business as a corporation is that stockholders can deduct their pro rata share of the taxes the firm pays, thereby eliminating the double taxation investors would face in a partnership.