According to the Neoclassical Model of Investment, the Immediate Impact

question 71

Multiple Choice

According to the neoclassical model of investment, the immediate impact of an earthquake that destroys part of the capital stock will be to:

• A) increase the cost of capital, the rental price of capital, and the rate of investment.
• B) increase the rental price of capital and the rate of investment, but to leave the cost of capital unchanged.
• C) increase the rental price of capital and the cost of capital, but to leave the rate of investment unchanged.
• D) increase the rental price of capital and the rate of investment, but to decrease the cost of capital.

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