Chapter 10 – Basic Macroeconomic Relationships
106. Given the expected rate of return on all possible investment opportunities in the
economy:
107. A decline in the real interest rate will:
108. The immediate determinants of investment spending are the:
Chapter 10 – Basic Macroeconomic Relationships
109. The investment demand curve suggests:
Chapter 10 – Basic Macroeconomic Relationships
110. Assume there are no prospective investment projects (I) that will yield an expected rate
of return (r) of 25 percent or more, but that there are $5 billion of investment opportunities
with an expected rate of return between 20 and 25 percent, an additional $5 billion between
15 and 20 percent, and so on. The investment-demand curve for this economy is:
Chapter 10 – Basic Macroeconomic Relationships
111. Assume there are no prospective investment projects (I) that will yield an expected rate
of return (r) of 25 percent or more, but that there are $5 billion of investment opportunities
with an expected rate of return between 20 and 25 percent, an additional $5 billion between
15 and 20 percent, and so on. If the real interest rate is 15 percent in this economy, the
aggregate amount of investment will be:
112. If business taxes are reduced and the real interest rate increases:
113. Other things equal, a 10 percent decrease in corporate income taxes will:
Chapter 10 – Basic Macroeconomic Relationships
114. The investment demand curve will shift to the right as the result of:
Answer the question on the basis of the following table:
115. The above schedule indicates that if the real interest rate is 8 percent, then:
Chapter 10 – Basic Macroeconomic Relationships
116. Other things equal, if the real interest rate falls and business taxes rise:
117. The investment demand curve will shift to the right as a result of:
118. The investment demand curve will shift to the left as a result of:
Chapter 10 – Basic Macroeconomic Relationships
119. If the real interest rate in the economy is i and the expected rate of return from additional
investment is r, then more investment will be forthcoming when:
120. A rightward shift of the investment demand curve might be caused by:
121. The real interest rate is:
Chapter 10 – Basic Macroeconomic Relationships
122. When we draw an investment demand curve we hold constant all of the following
except:
123. If the nominal interest rate is 18 percent and the real interest rate is 6 percent, the
inflation rate is:
124. If the inflation rate is 10 percent and the real interest rate is 12 percent, the nominal
interest rate is:
Chapter 10 – Basic Macroeconomic Relationships
125. A high rate of inflation is likely to cause a:
126. If the real interest rate in the economy is i and the expected rate of return on additional
investment is r, then other things equal:
127. If the real interest rate in the economy is i and the expected rate of return on additional
investment is r, then other things equal:
Chapter 10 – Basic Macroeconomic Relationships
128. Refer to the above diagram. Assume that for the entire business sector of a private closed
economy there is $0 worth of investment projects that will yield an expected rate of return of
25 percent or more. But there are $15 worth of investments that will yield an expected rate of
return of 20-25 percent; another $15 with an expected rate of return of 15-20 percent; and
similarly an additional $15 of investment projects in each successive rate of return range
down to and including the 0-5 percent range.
Which of the lines on the above diagram represents these data?
Chapter 10 – Basic Macroeconomic Relationships
Answer the question on the basis of the following information for a private closed economy.
Assume that for the entire business sector of the economy there is $0 worth of investment
projects that will yield an expected rate of return of 25 percent or more. But there are $15
worth of investments that will yield an expected rate of return of 20-25 percent; another $15
with an expected rate of return of 15-20 percent; and similarly an additional $15 of investment
projects in each successive rate of return range down to and including the 0-5 percent range.
129. Refer to the above information. If the real interest rate is 15 percent, what amount of
investment will be undertaken?
130. Refer to the above information. If the real interest rate is 5 percent, what amount of
investment will be undertaken?
Chapter 10 – Basic Macroeconomic Relationships
131. Refer to the above information. The expected rate of return curve:
132. Which of the following would shift the investment demand curve from ID1 to ID2?
Chapter 10 – Basic Macroeconomic Relationships
133. Which of the following would shift the investment demand curve from ID1 to ID3?
134. Which of the following would increase investment, while leaving an existing investment
demand curve, say, ID2, in place?
135. In annual percentage terms, investment spending in the United States is:
Chapter 10 – Basic Macroeconomic Relationships
136. Investment spending in the United States tends to be unstable because:
137. Investment spending in the United States tends to be unstable because:
138. Capital goods, because their purchases can be postponed like ______ consumer goods,
tend to contribute to ________ in investment spending.
Chapter 10 – Basic Macroeconomic Relationships
139. The multiplier effect means that:
140. The multiplier is:
141. The multiplier is useful in determining the: