2. The economic theory of investment states that investment expenditure at a given point in

time (It) is negatively affected by interest rate at a given point in time (rt). Suppose that the

functional relationship in the stated economic theory is linear and estimated values of the

intercept and slope are 82 and 0.6 respectively. Based on the stated economic theory and the

associated information, derive the estimated econometric model and predicate the value of

the dependent variable provided that 50 is given as value of the independent variable.