Use the following to answer questions
Exhibit: Investment Demand and Aggregate Demand
Figure 14-3
Panel (a)
Panel (b)
![Use the following to answer questions Exhibit: Investment Demand and Aggregate Demand Figure 14-3 Panel (a) Panel (b) -(Exhibit: Investment Demand and Aggregate Demand) Suppose the interest rate falls from 6% to 4.8%.The quantity of investment demanded rises by (I<sub>a</sub> - I<sub>b</sub>) As shown in Panel (a) .At a given price level, P<sub>1</sub>, this causes the aggregate demand curve to shift from C to D as shown in Panel (b) .What is the size of this shift? A) The distance CD is equal to (I<sub>a</sub> - I<sub>b</sub>) . B) The distance CD is equal to [MPC *(I<sub>a</sub> - I<sub>b</sub>) ] where MPC = marginal propensity to consume. C) The distance CD is equal to [MPI * (I<sub>a</sub> - I<sub>b</sub>) ] where MPI = marginal propensity to invest. D) The distance CD is equal to [Im *(I<sub>a</sub> - I<sub>b</sub>) ] where Im = investment spending multiplier.](https://d2lvgg3v3hfg70.cloudfront.net/TB8411/11eb7f43_33f2_3603_a5fe_35ee6c446219_TB8411_00.jpg)
![Use the following to answer questions Exhibit: Investment Demand and Aggregate Demand Figure 14-3 Panel (a) Panel (b) -(Exhibit: Investment Demand and Aggregate Demand) Suppose the interest rate falls from 6% to 4.8%.The quantity of investment demanded rises by (I<sub>a</sub> - I<sub>b</sub>) As shown in Panel (a) .At a given price level, P<sub>1</sub>, this causes the aggregate demand curve to shift from C to D as shown in Panel (b) .What is the size of this shift? A) The distance CD is equal to (I<sub>a</sub> - I<sub>b</sub>) . B) The distance CD is equal to [MPC *(I<sub>a</sub> - I<sub>b</sub>) ] where MPC = marginal propensity to consume. C) The distance CD is equal to [MPI * (I<sub>a</sub> - I<sub>b</sub>) ] where MPI = marginal propensity to invest. D) The distance CD is equal to [Im *(I<sub>a</sub> - I<sub>b</sub>) ] where Im = investment spending multiplier.](https://d2lvgg3v3hfg70.cloudfront.net/TB8411/11eb7f43_33f2_3604_a5fe_9d03cbb0d09c_TB8411_00.jpg)
-(Exhibit: Investment Demand and Aggregate Demand)
Suppose the interest rate falls from 6% to 4.8%.The quantity of investment demanded rises by (Ia - Ib)
As shown in Panel (a)
.At a given price level, P1, this causes the aggregate demand curve to shift from C to D as shown in Panel (b)
.What is the size of this shift?
A) The distance CD is equal to (Ia - Ib) .
B) The distance CD is equal to [MPC *(Ia - Ib) ] where MPC = marginal propensity to consume.
C) The distance CD is equal to [MPI * (Ia - Ib) ] where MPI = marginal propensity to invest.
D) The distance CD is equal to [Im *(Ia - Ib) ] where Im = investment spending multiplier.
Correct Answer:
Verified
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