Question

Suppose that capital becomes more productive. What would we expect to happen? Choose one:

A. The equilibrium interest rate and amount invested would both decrease.
B. The equilibrium interest rate would decrease while the equilibrium amount invested would increase.
C. The equilibrium interest rate would increase while the equilibrium amount invested would decrease.
D. The equilibrium interest rate and amount invested would both increase.

Answer 1

D. The equilibrium interest rate and amount invested would both increase

Step-by-step explanation:

Investment spending is a significant classification of actual GDP. Not exclusively is it the most unstable piece of real GDP; however, speculation spending on physical capital is additionally a significant supporter of financial development. Things being what they are, if a firm needs to construct another processing plant, where does it get the assets to assemble it? The investment of loanable assets depends on investment funds. The interest in loanable assets depends on getting.