According to the neoclassical theory of investment, the important determinant of investment spending is:

Question

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According to the neoclassical theory of investment, taxes and the real interest rate are the most important determinants of investment spending. This is because taxes reduce the after-tax return on investment, while the real interest rate represents the opportunity cost of investing in physical capital rather than other assets. Therefore, when taxes are high or the real interest rate is low, firms are less likely to invest in new equipment, machinery, and other physical capital.

According to the Neoclassical Theory of Investment, the Important Determinant