The theory of investment that emphasizes the roles of real interest rates and taxes is known as the
A) accelerator model.
B) neoclassical theory of investment.
C) multiplier model.
D) Q-theory of investment.

Question

Quizplus · Accepted Answer

The neoclassical theory of investment emphasizes the roles of real interest rates and taxes in determining the level of investment. It suggests that investment is driven by the cost of capital (influenced by real interest rates) and the expected return on investment, with taxes affecting the cost of capital and expected returns.

The Theory of Investment That Emphasizes the Roles of Real