If Net Investment Is Positive, Then

Multiple Choice

If net investment is positive, then:

A) the rate of interest (and the capital market) could still be in long-run equilibrium.
B) it is impossible to say whether the capital stock is growing, unless gross investment is also known.
C) the capital stock is increasing, which might cause the interest rate to fall in the long run if the greater capital is applied to fixed amounts of other factors.
D) the capital stock is increasing, causing the demand curve for capital to shift downward in the long run and the interest rate to fall.
E) this could be a long-run equilibrium position, provided net saving is zero.