If the (real) interest rate in the economy is i and the (real) expected rate of return from additional investment is r, then less investment will be forthcoming as: A. r rises while i remains the same. B. i becomes greater than r. C. r becomes greater than i. D. r rises. Suppose that a new machine tool having a useful life of only one year costs $80,000. Suppose, also, that the net profit resulting from buying this tool is expected to be $8,000. The expected rate of return, r on this tool is: A. 40 percent. B. 10 percent. C. 1 percent. D. 5 percent. Assume a machine which has a useful life of only one year costs $2,000. Assume, also, that net profit (not including interest cost) from the output of this machine is expected to be $200. If the firm finds it must borrow funds at an interest rate of 7 percent the firm should: A. not purchase the machine because the expected rate of return exceeds the interest rate. B. not purchase the machine because the interest rate exceeds the expected rate of return. C. purchase the machine because the expected rate of return exceeds the interest rate. D. purchase the machine because the interest rate exceeds the expected rate of return. The investment demand curve will shift to the left (decrease) as the result of all the following except _____. A. an increase excess production capacity. B. an increase in business taxes. C. businesses becoming less optimistic about future business conditions and decreased values of r. D. businesses becoming more optimistic about future business conditions and increased values of r. Capital goods, because their purchases can be postponed like _____ consumer goods, tend to contribute to _____ in investment spending. A. nondurable; instability B. nondurable; stability C. durable; instability D. durable; stability If the (real) interest rate in the economy is i and the (real) expected rate of return from additional investment is r, then more investment will be forthcoming as: A. increases as i remains the same. B. i becomes greater than r. C. i rises and r remains the same. D. r falls The 'simple' multiplier for an economy with no taxes and no imports is: A) 1/1(- MPC). B. 1/(1 + MPC). C. 1/(1 - MPS). D. 1/(MPC - 1)