Refer to the Above Diagram

question 120

Multiple Choice

Refer to the above diagram.Initially assume that the investment demand curve is I_d1.Which of the following effects of a budget deficit might shift the investment demand curve from I_d1 to I_d2, wholly offsetting any crowding-out effect?

• A)an improvement in profit expectations by businesses
• B)a decrease in saving
• C)a decline in the interest rate
• D)an increase in the marginal propensity to consume

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Definitions:

Expected Value

The anticipated value for a given investment or decision in probabilistic terms, calculated as the weighted average of all possible values.

Continuous Probability Distributions

Mathematical functions that describe the likelihood of any value within a continuous range occurring in a random variable.

Normally Distributed

A type of continuous probability distribution characterized by a bell-shaped curve symmetric about the mean.

Gasoline Prices

The cost per unit of gasoline, which can fluctuate based on factors like crude oil prices, taxes, demand, and supply situations.