MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
10th Edition
ISBN: 9781319467203
Author: Mankiw
Publisher: MAC HIGHER
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Chapter 3, Problem 4QQ
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The correct option.
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Which of the following is most likely to cause a rightward shift of the investment demand curve?
a. An increase in the market rate of interest
b. An increase in income
O c. A decrease in the market interest rate
d. An improvement in business expectations
e. A decrease in income
The position of IS curve depends on_______.
Select one:
a. none of the given options
b. rate of investment,
c. rate of interest,
d. autonomous expenditure
a. Looking at business fixed investment, explain why investment is negatively related to the interest rates.b. Using the Tobin’s q theory, explain the relationship between investment and capital stock?
Chapter 3 Solutions
MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
Ch. 3 - Prob. 1QQCh. 3 - Prob. 2QQCh. 3 - Prob. 3QQCh. 3 - Prob. 4QQCh. 3 - Prob. 5QQCh. 3 - Prob. 6QQCh. 3 - Prob. 1QRCh. 3 - Prob. 2QRCh. 3 - Prob. 3QRCh. 3 - Prob. 4QR
Ch. 3 - Prob. 5QRCh. 3 - Prob. 6QRCh. 3 - Prob. 7QRCh. 3 - Prob. 8QRCh. 3 - Prob. 1PACh. 3 - Prob. 2PACh. 3 - Prob. 3PACh. 3 - Prob. 4PACh. 3 - Prob. 5PACh. 3 - Prob. 6PACh. 3 - Prob. 7PACh. 3 - Prob. 8PACh. 3 - Prob. 9PACh. 3 - Prob. 10PACh. 3 - Prob. 11PACh. 3 - Prob. 12PACh. 3 - Prob. 13PACh. 3 - Prob. 14PA
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- 10. The breakeven point represents the level at which aggregate expenditures equal gross domestic product. True or false 12. The relationship between saving and the real interest rate is called investment demand. True or false 17. The daily use of the term investment, understood as the purchase of stocks or bonds, can cause confusion with the term capital invention. True or falsearrow_forwardIf firms are less optimistic that future profits will rise and remain strong for the next few years, then: Select one: a. investment spending will fall. b. investment spending will rise. c. investment spending will remain unaffected. d. investment spending will rise at first, then fall.arrow_forwardIf business taxes are reduced and the real interest rate increases: * A. consumption and saving will necessarily increase. B. the level of investment spending might either increase or decrease. C. the level of investment spending will necessarily increase D. the level of investment spending will necessarily decreasearrow_forward
- 27. Consumption depends on the real interest rate. a) Positively; positively b) Positively; negatively c) Negatively; negatively d) Negatively; positively on disposable income, and investment dependsarrow_forward________ Is that type of investment which is not affected by change in the level of output or incomearrow_forwardEquation for finding the steady state of equilibrium for investmentarrow_forward
- queation 5's answer with full steps thanksarrow_forwardThe national saving schedule (S) is usually drawn with a positive slope because: a. the value of the marginal product of capital is high when the real interest rate is high b. the demand for investment schedule shifts to the right when the real interest rate increases c. the private sector has a greater incentive to save when the real interest rate is high d. firm’s demand for investment is high when the real interest rate is higharrow_forwardExplain the difference between saving and investment as defined by a macroeconomist. Which of the following situations represent investment and which represent saving? Explain.a. Your family takes out a mortgage and buys a new house.You use your $200 paycheck to buy stock in Africel.Your roommate earns $100 and deposits it in his account at a bank.You borrow $1,000 from a bank to buy a car to use in your pizza delivery business.The interest rate is 7 percent. Use the concept of present value to compare $200 to be received in 10 years and $300 to be received in 20 years.A company has an investment project that would cost $10 million today and yield a payoff of $15 million in 4 years.Should the firm undertake the project if the interest rate is 11 percent? 10 percent? 9 percent? 8 percent?Can you figure out the exact cutoff for the interest rate between profitability and nonprofitability?arrow_forward
- Assume an economy with 600 consumers. Each consumer has income in the current period of 70 units and future income of 80 units and pays a lump-sum tax of 10 in the current period and 25 in the future period. The market real interest rate is 12%. Of the 600 consumers, 400 consume 70 units in the future, while 200 consume 20 units in the future. a. Determine each consumer's current consumption and current saving. For the group of consumers that consume 70 units in the future, current consumption is and current saving is For the group of consumers that consume 20 units in the future, current consumption is, and current saving is (Round to two decimal places as needed.)arrow_forwardSolve it correctlyarrow_forwardC wrongarrow_forward
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