In the market for capital, the discovery of new productive technologies increases the profitability of investments. The market interest rate _____, and the quantity of capital _____.

Question

Quizplus · Accepted Answer

The discovery of new productive technologies makes investments more profitable, leading to an increased demand for capital. This increased demand typically raises the market interest rate and also increases the quantity of capital as more investments are made.

In the Market for Capital, the Discovery of New Productive