Given the Expected Rate of Return on All Possible Investment

question 162

Multiple Choice

Given the expected rate of return on all possible investment opportunities in the economy:

• A)an increase in the real rate of interest will reduce the level of investment.
• B)a decrease in the real rate of interest will reduce the level of investment.
• C)a change in the real interest rate will have no impact upon the level of investment.
• D)an increase in the real interest rate will increase the level of investment.

---

Definitions:

Economic Upturn

A period of economic improvement characterized by higher levels of production, employment, and income.

Consumer Income

The total earnings of a consumer from various sources before taxes, crucial in determining spending and saving behaviors.

Normal Good

A good for which demand increases as consumer income rises.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, inversely related to income changes.