According to the Neoclassical Model of Investment, When the Real

question 46

Multiple Choice

According to the neoclassical model of investment, when the real interest rate increases, business fixed investment
Because the of capital increases.

• A)increases; marginal product
• B)increases; cost
• C)decreases; marginal product
• D)decreases; cost

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Definitions:

Equilibrium Price

The market price at which the quantity of goods supplied equals the quantity of goods demanded.

Elastic the Supply Curve

Describes a situation where the supply of a good or service changes significantly in response to changes in price.

Normal Good

A good for which demand increases as the income of consumers increase, holding other factors constant.

Inferior Good

A type of good for which demand decreases as the income of individuals increases, inverse to typical goods.