Question: 3. Let's assume that parameter b in the investment function is small. a. How an increase in the rental price (or interest rate) will affect

3. Let's assume that parameter b in the investment function is small.

a. How an increase in the rental price (or interest rate) will affect the level of investment in the economy? Why? Explain and use the models and graphs.

b. How an investment tax break will affect overall investment and the level of investment in the economy? Use model graph and explain

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1. Identify your reference point when making a decision based on an element of risk.

3. If there are reasonable alternatives, think about your decisions based on the different reference points and see if there are any contradictions in the decisions.

4. It is only at this point that you can give the problem your full attention in relation to the various ways you have framed the problem.