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

Question

Quizplus · Accepted Answer

In the neoclassical model, an increase in the real interest rate raises the cost of borrowing, leading to a decrease in business fixed investment.

According to the Neoclassical Model of Investment, When the Real