Question 11 (1 point) Other things equal, a decrease in the real interest rate w

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Question 11 (1 point)

Other things equal, a decrease in the real interest rate will:

Question 11 options:

shift the investment demand curve to the right.

move the economy downward along its existing investment demand curve.

move the economy upward along its existing investment demand curve.

shift the investment demand curve to the left.

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Question 12 (1 point)

Which of the following would not shift the aggregate supply curve?

Question 12 options:

A decline in the price of imported oil.

An increase in the price level.

A decline in business taxes.

An increase in labor productivity.

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Question 13 (1 point)

In the diagram, a shift from AS1 to AS3 might be caused by a(n):

Question 13 options:

increase in the prices of imported resources.

decrease in business taxes.

decrease in the prices of domestic resources.

increase in productivity.

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Question 14 (1 point)

Other things equal, a 10 percent decrease in corporate income taxes will:

Question 14 options:

shift the investment-demand curve to the right.

decrease the market price of real capital goods.

have no effect on the location of the investment-demand curve.

shift the investment-demand curve to the left.

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Question 15 (1 point)

The investment demand curve portrays an inverse (negative) relationship between:

Question 15 options:

the price level and investment.

investment and real GDP.

the nominal interest rate and investment.

the real interest rate and investment.

shift the investment demand curve to the right.

move the economy downward along its existing investment demand curve.

move the economy upward along its existing investment demand curve.

shift the investment demand curve to the left.

Explanation / Answer

Question 11

Other things equal, a decrease in the real interest rate will:

Question 11 options:

shift the investment demand curve to the right.

move the economy downward along its existing investment demand curve.

move the economy upward along its existing investment demand curve.

shift the investment demand curve to the left.

A decrease in the real interest rate will move the economy downward along its existing investment demand curve, provided that other things are equal. Because of decrease in the real interest rate, the whole economy with move downward, but along the same demand curve.

Question 12

Which of the following would not shift the aggregate supply curve?

Question 12 options:

A decline in the price of imported oil.

An increase in the price level.

A decline in business taxes.

An increase in labor productivity.

Increase in price level will not shift the supply curve as increase in price level has no direct effect on supply.

Question 13

In the diagram, a shift from AS1 to AS3 might be caused by a(n):

Question 13 options:

increase in the prices of imported resources.

decrease in business taxes.

decrease in the prices of domestic resources.

increase in productivity.

An increase in the price of imported resources will make the domestic resources relatively cheaper. Thus this will in turn increase the demand for domestic resources, thus increasing the price level.

Question 14

Other things equal, a 10 percent decrease in corporate income taxes will:

Question 14 options:

shift the investment-demand curve to the right.

decrease the market price of real capital goods.

have no effect on the location of the investment-demand curve.

shift the investment-demand curve to the left.

A decrease in corporate income tax will work as an incentive for the corporate houses to increase production, carry out expansion of business. Decrease in corporate tax will also lure the foreing corporates to invest in the country, thus increasing demand in the economy.

Question 15

The investment demand curve portrays an inverse (negative) relationship between:

Question 15 options:

the price level and investment.

investment and real GDP.

the nominal interest rate and investment.

the real interest rate and investment.

The investment demand curve portrays an inverse (negative) relationship between the real interest rate and investment as increase in real interest rate will decrease Investment in an economy and vice versa.

shift the investment demand curve to the right.

move the economy downward along its existing investment demand curve.

move the economy upward along its existing investment demand curve.

shift the investment demand curve to the left.

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