The investment share and the real interest rate

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Unformatted text preview: ment Other variables affect the firm's investment decision. Investment tax credits: Expectations of the future: More tax credits will increase investment spending, shifting the I/Y line to the right. Fewer tax credits will decrease investment spending, shifting the I/Y line to the left. If firms are more optimistic about business in the future, they will invest more today. This is illustrated as a shift in the I/Y line to the right. If firms are less optimistic about business in the future, they will invest less today. This is illustrated as a shift in the I/Y line to the left. Net Exports Higher interest rates at home will cause an appreciation of the country's currency. This will increase imports and decrease exports. X/Y will decrease. L...
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This note was uploaded on 06/01/2010 for the course ECONOMICS STA2012 taught by Professor Fan during the Spring '10 term at A.T. Still University.

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