According to the Neoclassical Model of Investment, When the Real

question 65

Multiple Choice

According to the neoclassical model of investment, when the real interest rate increases, business fixed investment ______ because the ______ of capital increases.

• A) increases; marginal product
• B) increases; cost
• C) decreases; marginal product
• D) decreases; cost

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Definitions:

Limits of Size

Refers to the maximum and minimum sizes that a part can be manufactured to and still meet specification requirements.

Maximum

The highest allowable value or limit, especially in the context of dimensions, tolerances, or specifications.

Minimum

The smallest or least possible amount, number, or degree in a set or specified range.

Unilateral Tolerancing

A dimensioning method where variations from the specified dimension are allowed in one direction (either positive or negative) only.