Planned investment spending-unplanned inventory investment

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Reference no: EM131091482

Explain how each of the following actions will affect the level of planned investment spending and unplanned inventory investment. Assume the economy is initially in income–expenditure equilibrium.

a. The Federal Reserve raises the interest rate.

b. There is a reduce in the expected growth rate of real GDP.

c. A sizable inflow of foreign funds into the country lowers the interest rate.

Reference no: EM131091482

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