Question 1

Which of the following will shift the investment demand curve to the right?

Accepted Answer

A) The imposition of government regulations that reduce the incentive to produce, for example, more stringent environmental regulation 
B) A decrease in the capacity utilization rate of capital 
C) A decrease in the cost of labor 
D) An increase in GDP 
A) The imposition of government regulations that reduce the incentive to produce, for example, more stringent environmental regulation 
B) A decrease in the capacity utilization rate of capital 
C) A decrease in the cost of labor 
D) An increase in GDP D

Question 2

Which of the following is not a component of gross private domestic investment spending?

Accepted Answer

A) An increase in business inventories 
B) The extensive renovation of an old factory building 
C) A consumer's purchase of a brand new condominium 
D) The purchase of stock in the General Electric Company 
A) An increase in business inventories 
B) The extensive renovation of an old factory building 
C) A consumer's purchase of a brand new condominium 
D) The purchase of stock in the General Electric Company D

Question 3

If the Fed wishes to stimulate aggregate demand, it will conduct an open market

Accepted Answer

A) sale which will lower bond prices, lower interest rates, and stimulate investment. 
B) purchase which will lower bond prices, lower interest rates, and discourage investment. 
C) sale which will lower bond prices, raise interest rates, and discourage investment. 
D) purchase which will raise bond prices, lower interest rates, and stimulate investment. 
A) sale which will lower bond prices, lower interest rates, and stimulate investment. 
B) purchase which will lower bond prices, lower interest rates, and discourage investment. 
C) sale which will lower bond prices, raise interest rates, and discourage investment. 
D) purchase which will raise bond prices, lower interest rates, and stimulate investment. D

Question 4

Use the following to answer questions 
Exhibit: Investment Demand and Aggregate Demand
Figure 14-3
Panel (a)
 Panel (b)
    
-(Exhibit: Investment Demand and Aggregate Demand)
Suppose the interest rate rises from 4.8% to 6% as shown in Panel (a)
And the quantity of investment demanded falls from Ia to Ib.As a result of this, in Panel (b)
,

Accepted Answer

A) the aggregate demand curve shifts from AD1 to AD2. 
B) the aggregate demand curve shifts from AD2 to AD1. 
C) the aggregate demand curve does not shift; there is a movement up along the prevailing aggregate demand curve. 
D) the aggregate demand curve does not shift; there is a movement down along the prevailing aggregate demand curve. 
A) the aggregate demand curve shifts from AD1 to AD2. 
B) the aggregate demand curve shifts from AD2 to AD1. 
C) the aggregate demand curve does not shift; there is a movement up along the prevailing aggregate demand curve. 
D) the aggregate demand curve does not shift; there is a movement down along the prevailing aggregate demand curve.

Question 5

Which of the following will shift the investment demand curve to the right?

Accepted Answer

A) An increase in the capital gains tax rate 
B) A decrease in the market interest rate 
C) An increase in the capacity utilization rate of capital 
D) The government repeals investment tax credits 
A) An increase in the capital gains tax rate 
B) A decrease in the market interest rate 
C) An increase in the capacity utilization rate of capital 
D) The government repeals investment tax credits

Question 6

Use the following to answer questions 
Exhibit: Money and Investment  
-Construction of a new home is an example of gross private domestic investment.

Accepted Answer

A) True 
 B)False

Question 7

In the short run, a decrease in the interest rate

Accepted Answer

A) will shift the aggregate demand curve to the right. 
B) will shift the investment demand curve to the right. 
C) will shift the long-run aggregate supply curve to the right. 
D) will shift the short-run aggregate supply curve to the right. 
A) will shift the aggregate demand curve to the right. 
B) will shift the investment demand curve to the right. 
C) will shift the long-run aggregate supply curve to the right. 
D) will shift the short-run aggregate supply curve to the right.

Question 8

Use the following to answer questions 
Exhibit: Investment Projects
  
-(Exhibit: Investment Projects)
If the market interest rate is 13%, what is the quantity of investment demanded?

Accepted Answer

A) $800 
B) $1,000 
C) $2,000 
D) $4,000 
A) $800 
B) $1,000 
C) $2,000 
D) $4,000

Question 9

Which of the following will shift the investment demand curve to the left?

Accepted Answer

A) An expectation of increased profitability 
B) An increase in the rate of new technological innovations 
C) An increase in the market interest rate 
D) The government repeals investment tax credits 
A) An expectation of increased profitability 
B) An increase in the rate of new technological innovations 
C) An increase in the market interest rate 
D) The government repeals investment tax credits

Question 10

Use the following to answer questions 
Exhibit: Investment and Production Possibilities  
-(Exhibit: Investment and Production Possibilities)
An increase in investment is illustrated by moving from

Accepted Answer

A) point m to point n on curve A. 
B) point q to point p on curve A. 
C) point v on curve C to point s on curve B. 
D) point w on curve C to point r on curve B. 
A) point m to point n on curve A. 
B) point q to point p on curve A. 
C) point v on curve C to point s on curve B. 
D) point w on curve C to point r on curve B.

Question 11

Use the following to answer questions 
Exhibit: Money and Investment  
-A reallocation of resources to consumption goods from capital goods is investment that shifts the production possibilities curve outward.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following will shift the investment demand curve to the right?

Accepted Answer

A) The imposition of government regulations that reduce the incentive to produce, for example, more stringent environmental regulation 
B) An increase in the rate of new technological innovations. 
C) An increase in the cost of new capital goods 
D) A decrease in the market interest rate 
A) The imposition of government regulations that reduce the incentive to produce, for example, more stringent environmental regulation 
B) An increase in the rate of new technological innovations. 
C) An increase in the cost of new capital goods 
D) A decrease in the market interest rate

Question 13

Over time, changes in investment
I.shift a nation's production possibilities curve outward.
II.shift the long-run aggregate supply curve to the right.
III.shift the short-run aggregate supply curve to the right.
IV.contribute to economic growth.

Accepted Answer

A) I and IV only 
B) II and IV only 
C) I, II, and IV only 
D) I, II, III, and IV 
A) I and IV only 
B) II and IV only 
C) I, II, and IV only 
D) I, II, III, and IV

Question 14

Use the following to answer questions 
Exhibit: The Economy's Investment Demand Schedule
  
-A decrease in the interest rate will cause a(n)

Accepted Answer

A) increase in the investment demand curve. 
B) decrease in the investment demand curve. 
C) movement up along the investment demand curve. 
D) movement down along the investment demand curve. 
A) increase in the investment demand curve. 
B) decrease in the investment demand curve. 
C) movement up along the investment demand curve. 
D) movement down along the investment demand curve.

Question 15

Higher interest rates will lead to increased investment.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a determinant of investment demand?

Accepted Answer

A) Producers' expectations about the level of economic activity 
B) A decline in consumers' confidence in the economic outlook 
C) The quantity of capital stock 
D) Household wealth 
A) Producers' expectations about the level of economic activity 
B) A decline in consumers' confidence in the economic outlook 
C) The quantity of capital stock 
D) Household wealth

Question 17

Net investment adds to the nation's capital stock.

Accepted Answer

A) True 
 B)False

Question 18

All other things unchanged, rapid advances in technology and the introduction of new products tends to

Accepted Answer

A) have no effect on the level of investment. 
B) shift the investment demand curve to the left. 
C) have no effect on the investment demand curve. 
D) shift the investment demand curve to the right. 
A) have no effect on the level of investment. 
B) shift the investment demand curve to the left. 
C) have no effect on the investment demand curve. 
D) shift the investment demand curve to the right.

Question 19

Use the following to answer questions 
Exhibit: Investment Projects
  
-(Exhibit: Investment Projects)
If the market interest rate falls from 15% to 11%, what happens to the quantity of investment demanded?

Accepted Answer

A) It decreases by $2,200 because investment is now less profitable. 
B) It decreases by $1,000 because investment is now less profitable. 
C) It increases by $200 because investment is now more profitable. 
D) It increases by $2,200 because investment is now more profitable. 
A) It decreases by $2,200 because investment is now less profitable. 
B) It decreases by $1,000 because investment is now less profitable. 
C) It increases by $200 because investment is now more profitable. 
D) It increases by $2,200 because investment is now more profitable.

Question 20

An important short-run consequence of a lower interest rate is an increase in aggregate demand.

Accepted Answer

A) True 
 B)False

Which of the following will shift the investment demand curve to the right?

Which of the following is not a component of gross private domestic investment spending?

If the Fed wishes to stimulate aggregate demand, it will conduct an open market

Which of the following will shift the investment demand curve to the right?

Use the following to answer questions Exhibit: Money and Investment -Construction of a new home is an example of gross private domestic investment.

In the short run, a decrease in the interest rate

Use the following to answer questions Exhibit: Investment Projects -(Exhibit: Investment Projects) If the market interest rate is 13%, what is the quantity of investment demanded?

Which of the following will shift the investment demand curve to the left?

Use the following to answer questions Exhibit: Investment and Production Possibilities -(Exhibit: Investment and Production Possibilities) An increase in investment is illustrated by moving from

Use the following to answer questions Exhibit: Money and Investment -A reallocation of resources to consumption goods from capital goods is investment that shifts the production possibilities curve outward.

Which of the following will shift the investment demand curve to the right?

Over time, changes in investment I.shift a nation's production possibilities curve outward. II.shift the long-run aggregate supply curve to the right. III.shift the short-run aggregate supply curve to the right. IV.contribute to economic growth.

Use the following to answer questions Exhibit: The Economy's Investment Demand Schedule -A decrease in the interest rate will cause a(n)

Higher interest rates will lead to increased investment.

Which of the following is not a determinant of investment demand?

Net investment adds to the nation's capital stock.

All other things unchanged, rapid advances in technology and the introduction of new products tends to

Use the following to answer questions Exhibit: Investment Projects -(Exhibit: Investment Projects) If the market interest rate falls from 15% to 11%, what happens to the quantity of investment demanded?

An important short-run consequence of a lower interest rate is an increase in aggregate demand.

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

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Exam 14: Investment and Economic Activity

Which of the following will shift the investment demand curve to the right?

Which of the following is not a component of gross private domestic investment spending?

If the Fed wishes to stimulate aggregate demand, it will conduct an open market

Which of the following will shift the investment demand curve to the right?

Use the following to answer questions Exhibit: Money and Investment -Construction of a new home is an example of gross private domestic investment.

In the short run, a decrease in the interest rate

Use the following to answer questions Exhibit: Investment Projects -(Exhibit: Investment Projects) If the market interest rate is 13%, what is the quantity of investment demanded?

Which of the following will shift the investment demand curve to the left?

Use the following to answer questions Exhibit: Investment and Production Possibilities -(Exhibit: Investment and Production Possibilities) An increase in investment is illustrated by moving from

Use the following to answer questions Exhibit: Money and Investment -A reallocation of resources to consumption goods from capital goods is investment that shifts the production possibilities curve outward.

Which of the following will shift the investment demand curve to the right?

Over time, changes in investment I.shift a nation's production possibilities curve outward. II.shift the long-run aggregate supply curve to the right. III.shift the short-run aggregate supply curve to the right. IV.contribute to economic growth.

Use the following to answer questions Exhibit: The Economy's Investment Demand Schedule -A decrease in the interest rate will cause a(n)

Higher interest rates will lead to increased investment.

Which of the following is not a determinant of investment demand?

Net investment adds to the nation's capital stock.

All other things unchanged, rapid advances in technology and the introduction of new products tends to

Use the following to answer questions Exhibit: Investment Projects -(Exhibit: Investment Projects) If the market interest rate falls from 15% to 11%, what happens to the quantity of investment demanded?

An important short-run consequence of a lower interest rate is an increase in aggregate demand.

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Filters