If the Real Interest Rate in the Economy Is I

question 198

Multiple Choice

If the real interest rate in the economy is i and the expected rate of return on additional investment is r, then, other things equal,

• A) investment will take place until i and r are equal.
• B) investment will take place until r exceeds i by the greatest amount.
• C) r will rise as more investment is undertaken.
• D) i will fall as more investment is undertaken.

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