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Author Question: Explain the relationship between the real interest rate and investment demand. Compare that ... (Read 124 times)

jho37

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on: Jun 29, 2018
Explain the relationship between the real interest rate and investment demand. Compare that relationship to the relationship between expected profit and investment demand.
 
  What will be an ideal response?

Question 2

There is a man yelling for help on a crowded subway platform. What are two reasons that the man may not get the help he needs?
 
  What will be an ideal response?


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InfiniteSteez

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The real interest rate determines the quantity of investment demanded. There is an inverse relationship between the real interest rate and the quantity of investment demanded. Expected profit affects investment. An increase in the expected profit from investing increases investment. Hence there is a positive relationship between investment and expected profit.

Answer to Question 2

Pluralistic ignorance and diffusion of responsibility are two possible reasons.


jho37

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Reply 2 on: Jun 29, 2018
Excellent

FergA

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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