In the long run, if the marginal product of capital equals the real interest rate, investment is given by: g

Investment equals savings.

Explanation:

Marginal product of capital is the real rental price of the capital. It is equal to the real interest rate if the law of diminishing returns is prevailing in the economic system. In such case the investments will be equal to savings. If the real interest rate is increased by the marginal product of capital then depreciation rate and risk premium accounts for the difference.

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