Assume That for the Entire Business Sector of a Private

question 48

Multiple Choice

Assume that for the entire business sector of a private closed economy, there are $0 worth of investment projects that will yield an expected rate of return of 25 percent or more. But there are $15
Worth of investments that will yield an expected rate of return of 20-25 percent, another $15 with an
Expected rate of return of 15-20 percent, and an additional $15 of investment projects in each
Successive rate of return range down to and including the 0-5 percent range. The expected rate of
Return curve

• A) shows a direct relationship between the interest rate and investment.
• B) is also the investment demand curve.
• C) is indeterminate.
• D) implies a direct (positive) relationship between the interest rate and the level of GDP.

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Definitions:

Production Runs

The process of manufacturing a certain quantity of products in a continuous sequence without interruptions.

Short Turnaround

The quick completion or response time between initiating a process and its completion, often used in reference to projects or delivery of services.

Perceived Scarcity

A situation where consumers believe that a product or resource is scarce, which can increase its value and demand, regardless of its actual availability.

Overnight Ground Service

A shipping service that promises delivery of packages to their destination the next business day via ground transportation.