Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Describe some of the fundamental principles that should be applied in comparing mutually exclusive investment alternatives?
Expert Solution
Step 1
The investment is an important factor that leads to the growth and development of an economy. The interest rate is the main attraction which increases and decreases the investment decisions in an economy. For the main reason is that there is an inverse relationship between the interest rate and the investment. When the interest rate increases, the investment decreases as the opportunity cost of investment was higher and vice versa.
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