Assume that investment spending depends only on the interest rate and no longer depends on output....
Assume that investment spending depends only on the interest rate and no longer depends on output. Given this information, a decrease in money supply:
a. will cause investment to increase.
b. may cause investment to increase or decrease.
c. will have no effect on output.
d. will cause a reduction in output and have no effect on the interest rate.
e. will cause investment to decrease.
Homework Answers
Answer : Option E is correct. As investment spending directly decrease than the interest rate has been increased as a result that an investment spending has been decrease because higher interest rate has been paid for them.
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Assume that investment spending depends only on the interest
rate and no longer depends on output....
- Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against...
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t t Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted...
t t Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against the nominal interest rate on the vertical axis). This money demand curve will shift to the right when which of the following occurs? a. an increase in income. b. a reduction in the interest rate. c. an increase in the money supply. d. a decrease in the money supply. II. At the current interest rate, suppose the supply of money is less than...
Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against the...
Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against the nominal interest rate (on the vertical axis). This money demand curve will shift to the right when which of the following occurs? a. an increase in income. b. a reduction in the interest rate. c. an increase in the money supply. d. a decrease in the money supply. II. At the current interest rate, suppose the supply of money is less than the demand...
Below is some data concerning the money market. Rate of Interest Asset Demand for Money $75...
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Please do all Thank you 7. Given the expected rate of return on all possible investment...
Please do all
Thank you
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7. According to the theory of liquidity preference, decreasing the money supply will nominal interest rates...
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question 44 An increase in investment spending can be expected to the aggregate demand curve. interest...
question 44
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t t Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against the nominal interest rate on the vertical axis). This money demand curve will shift to the right when which of the following occurs? a. an increase in income. b. a reduction in the interest rate. c. an increase in the money supply. d. a decrease in the money supply. II. At the current interest rate, suppose the supply of money is less than...
Question 1 (5 marks) I. Suppose money demand (on the horizontal axis) is plotted against the nominal interest rate (on the vertical axis). This money demand curve will shift to the right when which of the following occurs? a. an increase in income. b. a reduction in the interest rate. c. an increase in the money supply. d. a decrease in the money supply. II. At the current interest rate, suppose the supply of money is less than the demand...
Below is some data concerning the money market. Rate of Interest Asset Demand for Money $75 5% National income $740 720 700 680 660 6% 65 7% 8% 35. Refer to the information above to answer this question. If the transactions demand for money is 10 percent of national income and the supply of money is $135 then what would be the equilibrium interest rate? A) 4%. B) 5%. C) 6%. D) 7%. E) 8%. 36. Refer to the information...
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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question 44
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