question archive The following figure shows two (planned) investment functions
Subject:EconomicsPrice: Bought3
The following figure shows two (planned) investment functions. Other things equal, which of the following statements is correct?
A. Planned Investment is less responsive to the real interest rate with function B than with A
B. Planned Investment is more responsive to the real interest rate with function A than with B
C. Monetary policy will have a greater effect on PAE with function A than with B
D. Monetary policy will have a greater effect on PAE with function B than with A
E. An increase in the real interest rate will lower the user cost of capital and reduce planned investment with both A and B.
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