Answer to Question #72270 in Macroeconomics for Abhishek Paul

Question

The indeterminacy problem arises in neoclassical theory of investment because under this theory we want to determine both the rate of capital accumulation and the stock of capital from the same investment equation.What would be the correct option?
a)The statement is false
b)The statement confuses between stock and flow of capital
c)The statement is true

Answer 1

The indeterminacy problem arises in neoclassical theory of investment because under this theory we want to determine both the rate of capital accumulation and the stock of capital from the same investment equation. What would be the correct option, so the statement is true and the correct answer is c.