Assume there are no investment projects that will produce an expected rate of return of 8...
Assume there are no investment projects that will produce an expected rate of return of 8 percent or more. There are, however, $2 billion worth of investment projects with an expected rate of return at 7 percent, an additional $2 billion for every drop of the interest rate by 1 percent. If the real interest rate is 3 percent in this economy, the cumulative amount of investment at the 3 percent or higher rate of return is:
A. $10 billion B. $8 billion C. $6 billion D. $4 billion
Homework Answers
It is given that for everyone percentage decline in the rate of interest, there is an increase in investment project by 2 billion dollar. When the rate of interest is 7%, there are two billion dollar worth of investment project. When real interest rate is 3%, interest rate is dropped by 4% which means investment will increase by 4*2 = 8 billion. Hence cumulative amount of investment will be 10 billion dollar
Select option A
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Assume there are no investment projects that will produce an
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Assume there are no investment projects in the economy that yield an expected rate of return...
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 at least 20 percent; another $10 billion yielding at
least 15 percent; another $10 billion yielding at least 10 percent;
and so forth.
a. Draw this relationship between the expected rate of return and the amount of investment expenditure. Instructions: Use the tool provided 'ID' to...
Assume that for the entire business sector of the economy there is $5 worth of investment...
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Please do all Thank you 7. Given the expected rate of return on all possible investment...
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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 at least 20 percent; another $10 billion yielding at
least 15 percent; another $10 billion yielding at least 10 percent;
and so forth.
a. Draw this relationship between the expected rate of return and the amount of investment expenditure. Instructions: Use the tool provided 'ID' to...
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Please do all
Thank you
7. Given the expected rate of return on all possible investment opportunities in the economy, a(n) B. decrease in the real rate of interest will tend to increase the level of investment. C. decrea A. increase in the real rate of interest will tend to increase the level of investment. se in the real rate of interest will tend to decrease the level of investment. D. change in the real interest rate will have no...
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