a. Looking at business fixed investment, explain why investment is negatively related to the interest rates. b. Using the Tobin’s q theory, explain the relationship between investment and capital stock?

a. Looking at business fixed investment, explain why investment is negatively related to the interest rates. b. Using the Tobin’s q theory, explain the relationship between investment and capital stock?

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Classical Macro Economics And The Self Regulating Economy

Section: Chapter Questions

Problem 3QP

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a. Looking at business fixed investment, explain why investment is negatively related to the interest rates.
b. Using the Tobin’s q theory, explain the relationship between investment and capital stock?

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