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Assume that the investment function is given by I = 1,000 - 30r, where I is investment spending and r is the real rate of interest (in percent: that is, if the real interest rate is 6 percent, then r = 6). Assume further that the nominal rate of interest is 10 percent and the expected inflation rate is 2 percent. According to the investment function, investment will be?

Microeconomics, Economics

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