In the Short Run, Because Financial Markets Do Not Respond

question 76

Multiple Choice

In the short run, because financial markets do not respond immediately to interest rate changes:

• A) prices are very volatile
• B) the marginal product of capital always is greater than the real interest rate
• C) the marginal product of capital never deviates to the real interest rate
• D) the marginal product of capital deviates from the real interest rate
• E) investment is less volatile than output

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