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! Determine how each of the following events will shift the investment demand (1) curve.Event Number12.EventAn increase in the rate of technological progress will cause the investment demand curve toshift to theleft/rightBusiness executives becoming more pessimistic about future sales, operating costs, andprofits will cause the investment demand curve to shift to theleft/right TapterThe following table shows the expected rate of profit and the cumulative amount of investment with that rate of profit or higher in a hypotheticaleconomy. For example, $20 billion worth of investment projects have an expected rate of profit that is greater than or equal to 11%. Put anotherway, at an interest rate of 11%, the amount of investment demanded equals $20 billion.Expected Rate of Profit Cumulative Investment at this Rate of Profit or Higher(Percent)(Billions of Dollars)1410118INTEREST RATE (Percent)16Using the blue points (circle symbol), plot the hypothetical economy's investment demand curve (I) on the graph. Line segments willautomatically connect the points.1514131250O10OO20305060REAL INVESTMENT (Billions of dollars)407020304080Investment Function.(?)

Investment means the capital formation process it is the net addition of stock during the year.

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

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

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.2P

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am. 122.
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Assume there are no investment projects in the economy that yield an expected rate of return of 25 percent or more. But suppose there are $10 billion of investment projects yielding expected returns of between 20 and 25 percent; another $10 billion yielding between 15 and 20 percent; another $10 billion yielding between 10 and 15 percent; and so forth. a. Cumulate these data and present them graphically using the graph below, putting the expected rate of return (and the real interest rate) on the vertical axis and the amount of investment on the horizontal axis. Instructions: Use the tool provided 'ID' to plot the investment demand curve (plot 6 points total). 30 Tools ID 20 15 10 10 20 30 40 50 60 Investment (billions of dollars) Instructions: Enter your answers as a whole number. b. What will be the equilibrium level of aggregate investment if the real interest rate is: 15 percent: $ billion 10 percent: $ billion 5 percent: $ billion Expected rate of return, percent 25
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Cindy takes a summer job and earns an after-tax income of $4,500. Her living expenses during the summer were $1,000. What was Cindy's saving during the summer and the change, if any, in her wealth? >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. .... Cindy's saving during the summer is $ The change in Cindy's wealth is $.
Suppose that the demand for loanable funds for car loans in the Milwaukee area is $12 million per month at an interest rate of 1O percent per year, $13 million at an interest rate of 9 percent per year, $14 million at an interest rate of 8 percent per year, and so on. If the supply of loanable funds is fixed at $18 million, what will be the equilibrium interest rate? Instructions: Enter your answer as a whole number. percent per year
3. Describe the relationship shown by the investment demand curve. A rise in real interest rates would raise the price of borrowing for households, so consumption would likely (increase, decline) , especially consumption of products usually bought on credit such as homes and automobiles. A rise in interest rates (increase, decline) the rate of return earned on savings, making saving more attractive, so savings would likely (increase, decline). The investment demand curve relates investment to the real rate of interest and the expected rate of ) that ). return. That is, the basic determinants of investment are ( businesses hope to realize from investment spending, and ( When the real interest rate rises, investment ( increases, decreases); and when the real interest rate drops, investment increases-other things equal in both cases. Graphically the interest rate and expected rate of return are measured on the (horizontal, vertical) axis and the amount of investment is measured on the…
Refer to the figure below to answer the following questions. Real interest rate (percent per year) CON 6 5 4 3 2 1 0 H H Select one: DLF₂ DLFO 0.5 1.0 1.5 2.0 Loanable funds (trillions of 2002 dollars) DLF₁ Refer to Figure 23.2.2. In Figure 23.2.2, a decrease the real interest rate will result in a movement from point E to A. point F. B. point G. C. point H. D. point. O E. either point G or point F. Figure 23.2.2
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1. Let's use the Euler equation two ways. First, to find out the optimal consump- tion path, taking the interest rate as given (Chapter 9 of GLS) and then to find out the equilibrium interest rate that wil Choose sidebar display for saving and investment, taking the consumption path as given (Chapter 11 of GLS). Both times, the utility function will be the same: Uln(c)+0.9ln(+1) So the future counts 90% as much as the present. In Part 1, income each period is 100, and the interest rate is 20%. In Part 2, consumption in each period is 100-in other words, income each period is 100, but income isn't storable (it's "manna"), so you have to consume it or lose it. Answer the following questions. Part 1: What is optimal consumption each period? In period t of this two- period world, will this person be borrowing or saving or neither? ⚫ Part 2: What is the equilibrium interest rate between these two periods? If the equilbrium interest rate were lower than that level, would that create a…