Where Does the Interest Rate Fit into the Accelerator Hypothesis

question 4

Multiple Choice

Where does the interest rate fit into the accelerator hypothesis of investment?

• A)It helps determine the error-learning parameter,j.
• B)It helps determine the ratio of desired capital to expected sales,v*.
• C)It helps determine the depreciation ratio of capital stock to replacement investment.
• D)Nowhere: the hypothesis says that investment is independent of the interest rate.

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