Answer the Question on the Basis of the Following Information $\begin{array}{cc}\underline{{i}}&\underline{{I} }\\20&\$50\\16 & 40 \\12 & 30 \\8 & 20 \\4 & 10 \\0 & 0\end{array}$

question 156

Multiple Choice

Answer the question on the basis of the following information.Assume that if the interest rate that businesses must pay to borrow funds were 20 percent,it would be unprofitable for businesses to invest in new machinery and equipment,so investment would be zero.But if the interest rate were 16 percent,businesses would find it profitable to invest $10 billion.If the interest rate were 12 percent,$20 billion would be invested.Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate. Refer to the information.Using i and I to indicate the interest rate and investment (in billions of dollars) respectively,which of the following is the correct tabular presentation of the described relationship?

A.
$\begin{array}{cc}\underline{{i}}&\underline{{I} }\\20&\$50\\16 & 40 \\12 & 30 \\8 & 20 \\4 & 10 \\0 & 0\end{array}$

B.
$\begin{array}{cc}\underline{i} & \underline{I} \\24&\$10\\20 & 20 \\16 & 30 \\12 & 40 \\8 & 50 \\4 & 60\end{array}$

C.
$\begin{array}{cc}\underline{i}& \underline{I} \\20&\$0\\16 & 10 \\12 & 20 \\8 & 30 \\4 & 40 \\0 & 50\end{array}$

D.
$\begin{array}{cc}\underline{i} & \underline{I} \\ 20 & \$ 10 \\16 & 20 \\12 & 30 \\8 & 40 \\4 & 50 \\0 & 60\end{array}$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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