The investment share of GDP has a ________ relationship to the user cost and a(n) ________ relationship to the capital depreciation rate.
A) negative; negative
B) positive; positive
C) zero; positive
D) negative; positive
E) positive; inverse

Question

Quizplus · Accepted Answer

The investment share of GDP has a negative relationship to the user cost because as the cost of using capital increases, firms are less likely to invest, reducing the investment share of GDP. It has a positive relationship to the capital depreciation rate because as the depreciation rate increases, firms need to invest more to maintain their capital stock, increasing the investment share of GDP.

The Investment Share of GDP Has a ________ Relationship to the User