If the Marginal Product of Capital Is Smaller Than the Interest

question 45

Multiple Choice

If the marginal product of capital is smaller than the interest rate,then

• A) investment in capital will fall.
• B) people are earning negative rents from capital.
• C) the supply of current consumption will decline.
• D) borrowing will increase.

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Definitions:

Privatization

The act of moving control and ownership of a corporation, institution, agency, or governmental service from public authorities to private sector entities.

Military Functions

The roles and responsibilities of the armed forces, including defense, deterrence, and support in national emergencies.

For-profit Corporations

Businesses that operate with the primary goal of earning profit for their owners or shareholders.

Communism

An economic system where the state is the sole owner of the systems of production.