Consider an investor contemplating new investment. Suppose that she becomes less sure about future prospects of gains from such investment. Then it is most likely that,
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1 mark, −0.33MacroeconomicsConsumption and investmentMarginal efficiency of capital and the acceleratorModerateabout 1 min
UoH 2011 Question 13: Consumption and investment
Answer and worked solution
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Consumption and investment has come up 74 times in 7 exams since 2005.
What this question tests
This question is on Marginal efficiency of capital and the accelerator, part of Consumption and investment in Macroeconomics.
How expected returns, interest rates and output growth drive investment.
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