Economist A believes that the elasticity of investment is 0.76 while economist B believes that the elasticity of investment is 1.76.Which economist,A or B,is more likely to believe that a change in the interest rate will change the current economic environment?

Question

Quizplus · Accepted Answer

Economist B is more likely to believe that a change in the interest rate will change the current economic environment because she believes that investment is more sensitive to changes in interest rates than economist A (whose belief in lower elasticity suggests that investment is less sensitive to interest rate changes).

Economist a Believes That the Elasticity of Investment Is 0