Suppose Favorable Weather Conditions Temporarily Raise the Marginal Productivity of Existing

question 16

Multiple Choice

Suppose favorable weather conditions temporarily raise the marginal productivity of existing capital.Weather conditions are expected to return to normal next year,so there is no change in the expected marginal productivity of future capital.In this situation,the interest rate will

• A) rise.
• B) fall.
• C) remain unchanged.
• D) react unpredictably.

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