Use the information in the following table to answer the next question. In the table, investment is in billions. (1) Interest Rate (2) Investment (billions of dollars) (3) Investment (billions of dollars) 4% $100 $80 5 90 70 6 80 60 7 70 50 8 60 40 Suppose the Fed increases the interest rate from 5 percent to 6 percent. As a result of this increase in the interest rate, using column (2) investment will Multiple Choice increase by $20 billion. decrease by $10 billion. increase by $10 billion.
Use the information in the following table to answer the next question. In the table, investment is in billions. (1) Interest Rate (2) Investment (billions of dollars) (3) Investment (billions of dollars) 4% $100 $80 5 90 70 6 80 60 7 70 50 8 60 40 Suppose the Fed increases the interest rate from 5 percent to 6 percent. As a result of this increase in the interest rate, using column (2) investment will Multiple Choice increase by $20 billion. decrease by $10 billion. increase by $10 billion.
Chapter16: Monetary Policy
Section: Chapter Questions
Problem 1SQP
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Question
Use the information in the following table to answer the next question. In the table, investment is in billions.
| (1) Interest Rate | (2) Investment (billions of dollars) | (3) Investment (billions of dollars) |
| 4% | $100 | $80 |
| 5 | 90 | 70 |
| 6 | 80 | 60 |
| 7 | 70 | 50 |
| 8 | 60 | 40 |
Suppose the Fed increases the interest rate from 5 percent to 6 percent. As a result of this increase in the interest rate, using column (2) investment will
Multiple Choice
-
increase by $20 billion.
-
decrease by $10 billion.
-
increase by $10 billion.
-
decrease by $20 billion.
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