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.If the real interest rate is 5 percent, what amount of investment will be undertaken?
A)$15
B)$30
C)$45
D)$60

Question

Quizplus · Accepted Answer

If the real interest rate is 5 percent, all investment projects with an expected rate of return greater than or equal to 5 percent will be undertaken. This includes all the projects from the 5-10 percent range up to the 20-25 percent range, totaling $60.

Assume That for the Entire Business Sector of a Private