1.

FIGURE 9-5 The investment demand curve. The investment demand curve is constructed by arraying all potential investment projects in descending order of their expected rates of return. The curve is downsloping, reflecting an inverse relationship between the real interest rate (the financial "price" of each dollar of investing) and the quantity of investment demanded.
R-1 9-5

The investment demand curve:

A. reflects a direct (positive) relationship between the real interest rate and investment.
B. reflects an inverse (negative) relationship between the real interest rate and investment.
C. shifts to the right when the real interest rate rises.
D. shifts to the left when the real interest rate rises.



2.

FIGURE 9-5 The investment demand curve. The investment demand curve is constructed by arraying all potential investment projects in descending order of their expected rates of return. The curve is downsloping, reflecting an inverse relationship between the real interest rate (the financial "price" of each dollar of investing) and the quantity of investment demanded.
R-1 9-5

In this figure:

A. greater cumulative amounts of investment are associated with lower expected rates of return on investment.
B. Lesser cumulative amounts of investment are associated with lower expected rates of return on investment.
C. higher interest rates are associated with higher expected rates of return on investment, and therefore greater amounts of investment.
D. interest rates and investment move in the same direction.



3.

FIGURE 9-5 The investment demand curve. The investment demand curve is constructed by arraying all potential investment projects in descending order of their expected rates of return. The curve is downsloping, reflecting an inverse relationship between the real interest rate (the financial "price" of each dollar of investing) and the quantity of investment demanded.
R-1 9-5

In this figure, if the real interest rate falls from 6 to 4 percent:

A. investment will increase from 0 to $30 billion.
B. investment will decrease by $5 billion.
C. the expected rate of return will rise by $5 billion.
D. investment will increase from $25 billion to $30 billion.



4.

FIGURE 9-5 The investment demand curve. The investment demand curve is constructed by arraying all potential investment projects in descending order of their expected rates of return. The curve is downsloping, reflecting an inverse relationship between the real interest rate (the financial "price" of each dollar of investing) and the quantity of investment demanded.
R-1 9-5

In this figure, investment will be:

A. zero if the real estate rate was zero
B. $40 billion if the real estate rate was 16 percent
C. $30 billion if the real estate rate was 4 percent
D. $20 billion if the real estate rate was 12 percent




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