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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
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