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Demand for Capital

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Please respond to number two, thanks.

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Solution Summary

The answer to this problem explains decreased shift in demand for capital. The second scenario is explained in this response. The references related to the answer are also included.

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We examine the second scenario:
Decreased shift in demand for capital occurs, or downward shift in demand for capital occurs during an economic downturn. Downward shift in demand for capital means that at the same interest rates less capital is demanded. Also, it means that the same capital is demanded at lower interest rates. The economic growth rate declines or the growth rate may even turn negative. This means the growth rate of GDP declines. The demand for ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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