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Q1- Which of the foloowing will cause the investment-demand curve to shift to the right? A....

Q1- Which of the foloowing will cause the investment-demand curve to shift to the right?

A. A decrease in interest rates
B. An increase in the cost of labor
C. An increase in disposable income
D. An increase in expected rate of return

Q2- Which of the following represents the use of fiscal policy to achueve economic stimulus?

A. Greater government expenditure or lower taxes
B. Greater government expenditure or higher taxes
C. Lower government expenditure or lower taxes
D. Lower government expenditure or higher taxes

Q3- Which of the following is nkg an automatic stabilizer?

A. Income Taxes
B. Unemplyment benefits
C. Welfare payments
D. Military spending

Q4- The crowding-put effect tends to be smaller during a recession because:

A. Consumer and business borrowing is already low
B. Taxes are higher
C. foreign contries want to borrow more from the US
D. U.S businesses want to invest more
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Answer #1

1.An increase in expected rate of return from investment would increase the demand for investment and shift the investment demand curve to the right.

Answer-D

2.Greater government expenditure and/or lower taxes would increase aggregate demand to achieve economic stimulus.

Answer-A

3.Military spending is a non development autonomous expenditure.

Answer-D

4.Borrowing is low during recession,so interest rate is low.A lower interest rate does not crowd out private investment.

Answer-A

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