With the increase in investment MEC ........

With the increase in investment, MEC:

Rises

Falls

Remains Constant

None of these

- Marginal Efficiency of Capital (MEC) refers to the expected rate of return on investment after considering costs.

- Option 1: Rises

- Typically incorrect. Increased investment usually drives MEC down as more projects compete for limited high-return opportunities.

- Option 2: Falls

- Correct. Increased investment often reduces MEC since high-return investment opportunities become saturated.

- Option 3: Remains Constant

- Unlikely. MEC is dynamic and changes with investment levels and economic conditions.

- Option 4: None of these

- Rare to choose. The first three options generally cover the possible outcomes.

Option 2: Falls is the correct answer.

Submit Error