Determine how each of the following events will shift the investment demand (1) curve. Event Number 1. 2. Event An increase in the rate of technological progress will cause the investment demand curve to shift to the left/right Business executives becoming more pessimistic about future sales, operating costs, and profits will cause the investment demand curve to shift to the left/right

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Need help with this. I did the graph, please let me know if its correct. Also I gave you possible answers on the 2nd picture.

THANK YOU!

**Determining Investment Demand Curve Shifts**

Determine how each of the following events will shift the investment demand (I) curve.

| Event Number | Event Description |
|--------------|-------------------|
| 1. | An increase in the rate of technological progress will cause the investment demand curve to shift to the _____. Options: left / right |
| 2. | Business executives becoming more pessimistic about future sales, operating costs, and profits will cause the investment demand curve to shift to the _____. Options: left / right |
Transcribed Image Text:**Determining Investment Demand Curve Shifts** Determine how each of the following events will shift the investment demand (I) curve. | Event Number | Event Description | |--------------|-------------------| | 1. | An increase in the rate of technological progress will cause the investment demand curve to shift to the _____. Options: left / right | | 2. | Business executives becoming more pessimistic about future sales, operating costs, and profits will cause the investment demand curve to shift to the _____. Options: left / right |
## Homework: Chapter 6

The following table shows the expected rate of profit and the cumulative amount of investment with that rate of profit or higher in a hypothetical economy. For example, $20 billion worth of investment projects have an expected rate of profit that is greater than or equal to 11%. Put another way, at an interest rate of 11%, the amount of investment demanded equals $20 billion.

| Expected Rate of Profit (Percent) | Cumulative Investment at this Rate of Profit or Higher (Billions of Dollars) |
|----------------------------------|--------------------------------------------------------------------------|
| 14                               | 10                                                                       |
| 11                               | 20                                                                       |
| 8                                | 30                                                                       |
| 5                                | 40                                                                       |

Using the blue points (circle symbol), plot the hypothetical economy’s investment demand curve (I) on the graph. Line segments will automatically connect the points.

### Graph Explanation

- **Axes**: 
  - The vertical axis represents the "Interest Rate (Percent)" ranging from 0 to 16.
  - The horizontal axis represents "Real Investment (Billions of dollars)" ranging from 0 to 80.

- **Plotted Points**:
  - At a 14% interest rate, the investment is $10 billion.
  - At an 11% interest rate, the investment is $20 billion.
  - At an 8% interest rate, the investment is $30 billion.
  - At a 5% interest rate, the investment is $40 billion.

- **Investment Function Line**: 
  - The points are connected by line segments to form a downward-sloping investment demand curve, showing the inverse relationship between interest rates and investment levels.
Transcribed Image Text:## Homework: Chapter 6 The following table shows the expected rate of profit and the cumulative amount of investment with that rate of profit or higher in a hypothetical economy. For example, $20 billion worth of investment projects have an expected rate of profit that is greater than or equal to 11%. Put another way, at an interest rate of 11%, the amount of investment demanded equals $20 billion. | Expected Rate of Profit (Percent) | Cumulative Investment at this Rate of Profit or Higher (Billions of Dollars) | |----------------------------------|--------------------------------------------------------------------------| | 14 | 10 | | 11 | 20 | | 8 | 30 | | 5 | 40 | Using the blue points (circle symbol), plot the hypothetical economy’s investment demand curve (I) on the graph. Line segments will automatically connect the points. ### Graph Explanation - **Axes**: - The vertical axis represents the "Interest Rate (Percent)" ranging from 0 to 16. - The horizontal axis represents "Real Investment (Billions of dollars)" ranging from 0 to 80. - **Plotted Points**: - At a 14% interest rate, the investment is $10 billion. - At an 11% interest rate, the investment is $20 billion. - At an 8% interest rate, the investment is $30 billion. - At a 5% interest rate, the investment is $40 billion. - **Investment Function Line**: - The points are connected by line segments to form a downward-sloping investment demand curve, showing the inverse relationship between interest rates and investment levels.
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