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What is the relationship between the marginal efficiency of capital and the rate of interest in the Keynesian theory?
  • a)
    They are unrelated concepts in Keynesian theory.
  • b)
    The marginal efficiency of capital is always higher than the rate of interest.
  • c)
    The marginal efficiency of capital is always lower than the rate of interest.
  • d)
    The difference between the marginal efficiency of capital and the rate of interest determines investment inducement.
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
What is the relationship between the marginal efficiency of capital an...
In the Keynesian theory, the difference between the marginal efficiency of capital (expected returns from investments) and the rate of interest plays a crucial role in determining the inducement to invest. If the marginal efficiency of capital is significantly higher than the rate of interest, there is a greater incentive for firms to invest. Conversely, if the marginal efficiency of capital is lower than the rate of interest, investment inducement is reduced. This relationship between the two factors affects the overall level of investment and employment.
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What is the relationship between the marginal efficiency of capital and the rate of interest in the Keynesian theory?a)They are unrelated concepts in Keynesian theory.b)The marginal efficiency of capital is always higher than the rate of interest.c)The marginal efficiency of capital is always lower than the rate of interest.d)The difference between the marginal efficiency of capital and the rate of interest determines investment inducement.Correct answer is option 'D'. Can you explain this answer?
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What is the relationship between the marginal efficiency of capital and the rate of interest in the Keynesian theory?a)They are unrelated concepts in Keynesian theory.b)The marginal efficiency of capital is always higher than the rate of interest.c)The marginal efficiency of capital is always lower than the rate of interest.d)The difference between the marginal efficiency of capital and the rate of interest determines investment inducement.Correct answer is option 'D'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about What is the relationship between the marginal efficiency of capital and the rate of interest in the Keynesian theory?a)They are unrelated concepts in Keynesian theory.b)The marginal efficiency of capital is always higher than the rate of interest.c)The marginal efficiency of capital is always lower than the rate of interest.d)The difference between the marginal efficiency of capital and the rate of interest determines investment inducement.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the relationship between the marginal efficiency of capital and the rate of interest in the Keynesian theory?a)They are unrelated concepts in Keynesian theory.b)The marginal efficiency of capital is always higher than the rate of interest.c)The marginal efficiency of capital is always lower than the rate of interest.d)The difference between the marginal efficiency of capital and the rate of interest determines investment inducement.Correct answer is option 'D'. Can you explain this answer?.
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