Answer to Question #219953 in Macroeconomics for vee

Question

22.In the Keynesian model, an increase in interest rates will result in …

[1] a downward movement along the investment curve. [2] an upward shift of the aggregate spending curve. [3] a downward shift of the aggregate spending curve. [4] a leftward shift of the money market curve

 

Use the information below to answer questions 3.27 to 3.30.

Autonomous consumption = R1000 Autonomous investment = R5000 Autonomous government spending = R20000 Net exports = R4000 Marginal propensity to consume = 0.7 Tax rate = 25%

 

23. Autonomous spending is …

[1] R25000 [2] R26000 [3] R22000 [4] R30000

 

24. The value of the multiplier is …

[1] 3.33 [2] 2.1 [3] 1.33 [4] 1

 

Answer 1

[1] a downward movement along the investment curve. 

The investment demanded' quantity is normally related negatively to interest rate. Any interest rate change results to movement along investment demand curve.