In the Equation $I _ { t } / \tilde { Y } _ { t } = \bar { a } _ { i } - \bar { b } \left( R _ { t } - \bar { r } \right)$

question 64

Multiple Choice

In the equation $I _ { t } / \tilde { Y } _ { t } = \bar { a } _ { i } - \bar { b } \left( R _ { t } - \bar { r } \right)$ , if $\bar { b }$
Equals zero, investment:

• A) is sensitive to tax rate changes
• B) is extremely sensitive to changes in the marginal product of capital
• C) is not very sensitive to real interest rate changes
• D) is insensitive to real interest rate changes
• E) equals zero

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