In: Economics
Use the neoclassical model of investment to explain the impact of each of the following on the user cost of capital, the marginal product of capital, and investment.
a. Anti-inflationary monetary policy decreases the rate of inflation.
b. An earthquake destroys part of the capital stock.
c. Immigration of foreign workers increases the size of the labor force.
d. Advances in computer technology make production more efficient.
ANSWER
impact of each of the following on the rental price of capital,
the cost of capital, and investment.