Re: some questions

Posted by Anviksha on May 26, 2015; 1:39pm
URL: http://discussion-forum.276.s1.nabble.com/some-questions-tp7597215p7597216.html

3.. It would be A..
If money supply increases, it is given that money demand is elastic. A small decrease in rate of interest will suffice to get money market back in equilibrium.
Now it is given that investment is inelastic,only  a very large decrease in interest rate can lead to large investment increase.
Here , there is only small decrease in rate of interest and thus it will lead to small increase in investment.