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In the Classical model of the closed economy in the long-run investment is negatively related to the real rate of interest because a higher real

In the Classical model of the closed economy in the long-run investment is negatively related to the real rate of interest because

a higher real interest rate represents a greater real return to saving and thus agents wish to save less.

none of the other options are correct.

a higher real interest rate represents a greater real cost to borrow and thus agents wish to borrow less.

a higher real interest rate represents a greater real return to saving and thus agents wish to save more.

a lower real interest rate represents a greater real cost to borrow and thus agents wish to borrow less.

we assume this is so

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