Asked by JOSHUA MILLER on Jun 19, 2024

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According to Keynes,investment was determined

A) equally by the interest rate and the expected profit rate.
B) mainly by the interest rate.
C) mainly by the expected profit rate.

Expected Profit Rate

The anticipated return on an investment, taking into account both the probability of gains and the risk of losses.

Interest Rate

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal.

  • Identify the key concepts central to Keynesian economics, including investment determination.
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ZN
zishan naziaJun 23, 2024
Final Answer :
C
Explanation :
According to Keynes, investment was mainly determined by the expected profit rate. He believed that businessmen make investment decisions based on their expectations of future profitability rather than just the interest rate. Keynes argued that if businessmen expected high profits, they would invest even if the interest rate was high, and if they expected low profits, they would not invest even if the interest rate was low. Thus, the expected profit rate was the primary factor determining investment decisions.