Which of the following is true when the expected future marginal product of capital increases?
A)The investment and the current account rise.
B)The investment rises but the current account declines.
C)The investment and the current account declines.
D)The investment declines but the current account rises.

Question

Quizplus · Accepted Answer

When the expected future marginal product of capital increases, firms are incentivized to invest more due to higher anticipated returns. This increase in investment typically leads to a decline in the current account, as more resources are allocated to investment rather than being available for export or saving.

Which of the Following Is True When the Expected Future