Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider a closed economy. There is the discovery of a new technology that increases the marginal product of capital. At the same time the government

Consider a closed economy. There is the discovery of a new technology that increases the marginal product of capital. At the same time the government runs a larger budget surplus. What effect will these two things have on savings, investment and real interest rates in the economy? a. Savings and investment will increase, and real interest rates will fall. b. Savings and investment will increase, and real interest rates will rise. c. Savings and investment will increase, and real interest rates could rise or fall. d. Savings and investment could increase or decrease, and real interest rates will rise. e. None of the other answers are correct

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics

Authors: N Gregory Mankiw

9th Edition

1464182892, 9781464182891

More Books

Students also viewed these Economics questions

Question

Explain the relationship between OSHA and NIOSH?

Answered: 1 week ago