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?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Savings,investment And The Financial System

Section: Chapter Questions

Problem 5PA

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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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