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Author Question: What does the investment demand curve show? What will be an ideal ... (Read 43 times)

HudsonKB16

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on: Jun 29, 2018
What does the investment demand curve show?
 
  What will be an ideal response?

Question 2

Robert Lucas, a Nobel laureate in economics, argues that there are ________ returns to human capital.
 
  A) negative B) decreasing C) constant D) increasing


underwood14

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

The investment demand curve shows the demand for capital in the economy as a function of the market interest rate. Only those investment projects that are expected to yield a rate of return higher than the market interest rate will be funded. Lower interest rates should stimulate investment.

Answer to Question 2

D


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