Homework Answers
1 - Option B
Real interest rate
We can determine the type of output gap , real GDP and price level from AD AS model but not the real interest rates
2 - Option B.
Purchase of new physical equipments such as new plant
Purchase of stocks , government spending and spending on human capital are not the physical investments. Hence option B will be correct
3 - False
During the recession , interest rates are high and level of investment is low. At this stage crowding in would not be more than crowding out.
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