4. The ________________________ refers to how much a project or an investment is expected to return to the investor, either in future interest payments, capital gains, or increased profitability.

a. expected rate of return

b. real rate of return

Booster class

Microeconomics

Skill

Explaining Households Supply of Financial Capital

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Raushan RajLv8

2 Nov 2020

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Related questions

5. The ____________________________ refers to the total rate of return, including capital gains and interest paid on an investment at the end of a period of time.

a. actual rate of return

b.expected rate of return

The immediate determinants of investment spending are the:

A. level of saving and the real interest rate.

B .marginal propensity to consume and the real interest rate.

C .interest rate and the expected price level.

D. expected rate of return on capital goods and the real interest rate

ceruleanlizard145

Suppose that the investment demand curve in a certain economy is such that investment declines by $120 billion for every 1 percentage point increase in the real interest rate. Also, suppose that the investment demand curve shifts rightward by $150 billion at each real interest rate for every 1 percentage point increase in the expected rate of return from the investment. If stimulus spending (an expansionary fiscal policy) by the government increases the real interest rate by 2 percentage points, but also raises the expected rate of return on investment by 1 percentage point, how much investment, if any, will be crowded out?