Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Can someone help me with these questions? 1)Show graphically how a decrease in the depreciation rate will affect the optimal capital stock and hence investment.
Can someone help me with these questions?
1)Show graphically how a decrease in the depreciation rate will affect the optimal capital stock and hence
investment.
2)Show graphically how an increase in animal spirits (SP), which increases the expected MPK, will
affect the optimal capital stock and hence investment. Assuming here that the firm uses the following
condition to make the investment choice MPK (K, SP) = r + and MPK(K, SP) is increasing in
animal spirits SP.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started