structions: Enter your answers as a whole number. What will be the equilibrium level of aggregate investment if the real interest rate is: 15 percent: $ |billion 10 percent: $ | billion 5 percent: $ | billion
structions: Enter your answers as a whole number. What will be the equilibrium level of aggregate investment if the real interest rate is: 15 percent: $ |billion 10 percent: $ | billion 5 percent: $ | billion
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter5: Business And Economic Forecasting
Section: Chapter Questions
Problem 2E
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Question
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faec37b69-afc0-436f-be9e-341de0f78260%2Fd6f3ec04-7ab0-4144-823e-de55d8b57d57%2Fpsa5eto_processed.png&w=3840&q=75)
Transcribed Image Text: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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