The investment demand curve will shift to the left as a result of

Updated on August 6, 2022

18 The investment demand curve will shift to the left as ibe result A Business pessimism about future economic cond B Limited available productive ca D. A decrease in business taxes 19. The value of the multiplier is likely to fall if there is a fall in: A Consumption B. Income C. Total spending D. The marginal propensity to consume 20. .Saving equals disposable income minus consumption. True False 21. A recession is defined as a situation where the average price level in the economy is increasing True False 22. Unemployment that is the result of deregulation, corporate downsizing and the closure of military bases is best categorized as frictional unemployment.

Answer

18. When expectation of returns falls, investment demand curve
will shift to the left. When the expectations of profitability
increases investment demand curve will shift to the right. Option A
is the correct answer.

19. the formula for multiplier is 1/1-mpc. When mpc is high, the
value in the denominator will be small and the value of the
multiplier will increase. So whem marginal propensity to consume
falls, the value of the multiplier will aslo fall. Option d is the
correct answer.

20.TRUE. Yes, saving is disposible income minus consumption.

21. FALSE. Durinf recession the average price level in the
economy my fall. The demand for goods will be very less and thus
the prices has to fall.

22. FALSE. Frictional unemployment is a voluntary unemployment.
It is when people leave a job to search for another job.