If the real interest rate is not constant,it implies that the real interest rate deviates from the marginal product of capital in the short run.

Question

Quizplus · Accepted Answer

In the short run, factors such as changes in inflation expectations, government policies, and other economic fluctuations can cause the real interest rate to deviate from the marginal product of capital. This implies that the real interest rate is not constant.

If the Real Interest Rate Is Not Constant,it Implies That