Question

17 If the current capital decreases, the investment demand curve will be ()

A shift right

B shift left

C unchanged

D uncertain

18 If the total factor productivity is expected to increase in the future, the investment demand curve will be ()

A shift right

B shift left

C unchanged

D uncertain

19 If the default premium on the credit market increases, the investment demand curve will be ()

A shift right

B shift left

C unchanged

D uncertain

20 The following statement about the current output supply curve is wrong ()

A The real interest rate is positively related to the current output supply

B. Any point on the output supply curve meets the equilibrium of the labor market

C. The increase in real interest rates causes a reduction in labor supply and output in the current period

D. The increase in real interest rates causes an increase in labor supply and output in the current period

Answer 1

Answer) If the current capital decreases, the investment demand curve will be shift left because as capital reduces investment curve will shift to the left because it is directly related, as capital decreases investment decreases.

Hence option B is the correct answer.

18) If the total factor productivity is expected to increase in the future, the investment demand curve shift right because higher productivity will lead to higher productions which increase firm profitability and hence shift to the right.

Hence option A is the correct answer .

19) if the default premium on the credit market increases, the investment demand curve will be shift left because they have to pay more so his lending cost will increase so he will borrow less.

Hence option B is the correct answer.

20)  Any point on the output supply curve meets the equilibrium of the labor market - This statement is False because there is only single when labor market is in equilibrium.

Hence option B is the correct answer.

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