What is the influence of the expected profit and the real ...

[anjilletteb]

What is the influence of the expected profit and the real interest rate on the amount of investment firms make?
 
  What will be an ideal response?

Question 2

The view that population growth occurs when real GDP per person exceeds the amount necessary to sustain life is part of the ________.
 
  A) classical growth theory
  B) modern theory of population growth
  C) neoclassical growth theory
  D) new growth theory

[jordangronback]

Answer to Question 1

Firms make a decision about whether to undertake an investment based upon the benefit of the investment, the expected profit, versus the opportunity cost of making the investment, the real interest rate. For any particular investment firms compare the expected profit to the real interest rate. If the expected profit exceeds the real interest rate the firm will undertake the investment. If the expected profit is less than the real interest rate the firm will not undertake the investment.

Answer to Question 2

A

[anjilletteb]

YES! Correct, THANKS for helping me on my review

[EAN94]

Gracias!