Question

 QUESTION 15

 Which one of the following factors will cause the investment demand curve to increase?

 a. Firms are finding themselves with a lot of excess capacity.

 b. Oil prices rise, triggering an increase in the cost of operating machinery and tools. 

 c. The government raises business taxes significantly.

 d. Business executives become more optimistic about future sales and profits.

 QUESTION 16

 Which one of the following will cause an upward shift of the aggregate expenditures schedule?

 a. An increase in real GDP (income)

 b. An increase in the expected rates of return on investment.

 c. An increase in the savings of households.

 d.An increase in the real interest rates.

 QUESTION 17

 One similarity between the aggregate supply and aggregate demand curves is that they both

 a. have positive slopes.

 b. have negative slopes.

 c. shift to the right when prices rise.

 d. relate the price level to real GDP.

Answer 1

15) option d is correct. When there is excess capacity there is no guarantee that investment is increased in fact it would reduce. increase in cost of production due to oil prices will decrease investment. Government policy will decrease investment. Positive business Outlook will increase investment.

16) option B is correct. Higher saving will actually shift it down, interest rate change will cause a rotation, and real GDP change will cause a movement.

17) option d is correct. Aggregate demand relates price and real GDP in inverse relationship while aggregate supply relates price and real GDP in direct relationship.