Wednesday, February 17, 2016

"An increase in the real interest rate increases the quantity of investment." Is the previous statement correct or incorrect?



"An increase in the real interest rate increases the quantity of investment." Is the previous statement correct or incorrect?

#Parkin #11edition #Finance #Saving #Investment #Chapter24

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1 comment:

  1. Rully MangunsongFebruary 17, 2016 at 8:04 AM

    Answer: The statement is false. The interest rate is the opportunity cost of the funds used to make an investment. Hence an increase in the interest rate decreases the quantity of investment demanded.

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