Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 9, Problem 5E
To determine
(a)
To write:
The investment is autonomously given. Drawing an investment function and show its shift when interest rate falls.
To determine
(b)
To write:
The investment is autonomously given. Drawing an investment function and show its shift when an investment tax is repealed.
To determine
(c)
To write:
The investment is autonomously given. Drawing an investment function and show its shift when the new president has pro-business policy.
To determine
(d)
To write:
The investment is autonomously given. Drawing an investment function and show its shift when there is excess capacity in the economy.
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Students have asked these similar questions
If U.S. consumers become more optimistic about their future income and wealth, the consumption function will shift upward.
True
or
False
Induced consumption is:(a)the part of consumption which is independent of the level of income.(b)the minimum level of consumption that is financed from sources other than income.(c)The maximum level of consumption that is financed from sources other than income.(d)shown by the slope of the consumption function
What is the proponsity to consumption function?
explain with formulae of average propensity to consume in micro economy.
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Similar questions
- Explain the determinants of investment. Include in your answer an explanation of how a change in each determinant affects investment.arrow_forwardAssume that consumption decreases, when interest rates increase. If there is a technological advance that leads to an increase in investment demand, then: A. investment increases and the interest rate rises. B. investment and the interest rate are both unchanged. C. investment is unchanged and the interest rate rises. D. investment decreases and the interest rate rises.arrow_forwardDerive the investment function (using the neoclassical model of investment). Explain how investment responds to changes in Marginal Product of Capital and interest rate.arrow_forward
- Given consumption function C = 0.6Y + 35 1) Find the equilibrium level of income Y for the planned investment l = 12 ? 2)Find the equilibrium level of consumptionarrow_forwardAssume that the level of autonomous consumption rises. Show in a graph what happens to the consumption function. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardThe position of IS curve depends on_______. Select one: a. none of the given options b. rate of investment, c. rate of interest, d. autonomous expenditurearrow_forward
- Consider the intertemporal model of consumption studied in class, with two possible periods. Consider initially that an individual is a borrower. If the interest rate increases: (a)The individual will never become a saver. (b)The individual will always remain a borrower. (c)The individual will be worse off, provided she remains a borrower. (d)The individual can be better off, but only if she becomes a saver. Both c and d.arrow_forward5. If investment also depends on real income, say I = g0 − g1r + g2Y what is the slope of the IS curve?arrow_forwardAssume an economy where the consumption function is defined as C = CC + CY and the investment function is defined as l = ir , where Y is total income and r is the interest rate. What does the slope of the IS curve depend on?arrow_forward
- What are the basic determinants of investment? Explain the relationship between the real interest rate and the level of investment. Why is investment spending unstable? How is it possible for investment spending to increase even in a period in which the real interest rate rises?arrow_forwardExplain what the consumption function shows and describe what is held constant along the consumption function . Response Must be 200 words in lengtharrow_forwardif consumption function is C = 500 + 0.8Yd. Then, autonomous consumption is * ________ In relation to question no. 2, if income increases by 2000, consumption will increase by: ______________arrow_forward
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