Question

When should investment stop in terms of MEI and the Rate of Interest?

Options

• When national income rises

• When \[I_g>I_r\]

• When \[MEI>\text{Rate of Interest}\]

• When \[MEI=\text{Rate of Interest}\]

Answer 1

Investment continues while MEI is greater than the Rate of Interest. It stops when \[MEI=\text{Rate of Interest}\], because no additional advantage remains.