Use the following cumulative investment schedule to answer the next question. Expected Rate of ReturnCumulative Amount of Investment (in billions)22%$11020150161801021052952380According to the cumulative investment table above, if the real interest rate falls from 20% to 16%, then
A. $180 billion of additional investments will be undertaken.
B. $440 billion of total investments will be undertaken.
C. $330 billion of total investments will be undertaken.
D. $30 billion of additional investments will be undertaken.
Answer: D
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An improvement in technology would
a. enable the economy to produce outside its original production possibilities frontier b. enable the economy to move along its original production possibilities frontier c. eliminate scarcity; therefore, the production possibilities frontier would no longer exist d. have no effect on the production possibilities frontier e. change the production possibilities frontier to a line with a positive slope
In the long run, if new fringe firms with same cost structures as existing fringe firms enter the oligopoly market:
a. the dominant firm's ability to extract profit from the market decreases. b. the fringe's ability to extract profit from the market decreases. c. the fringe supply curve rotates leftward and downward. d. the dominant firm's residual demand curve rotates rightward.
Why do economists avoid basing theories on the responses of a few individuals?
a. Individual responses are often incomplete. b. Individuals hate being tested. c. Individuals rarely know what they want. d. Individual responses are unpredictable.
The increase in the price of a good that is another potential output for another good would (for the second good)
A. move its supply curve to the left. B. cause a movement along the supply curve to a (lower price, lower quantity) point. C. cause a movement along the supply curve to a (higher price, higher quantity) point. D. move its supply curve to the right.