Question 1
Refer to the information provided in Figure 11.1 below to answer the question(s) that follow.
NOTE: The MEI (marginal efficiency of investment) curve represents the demand for investment.
Refer to Figure 11.1. If the market rate of interest is < 5%, this firm's investment will total
◦ $0.
◦ < $5,000.
◦ $7,000.
◦ > $15,000.
Question 2
An investment should be undertaken
◦ if the present value of the expected income stream associated with the investment is greater than the full cost of the investment project.
◦ if the present value of the expected income stream associated with the investment is less than the full cost of the investment project.
◦ any time the present value of the expected income stream associated with the investment is positive.
◦ if the present value of the costs of the investment project exceed the present value of the expected returns from the investment project.
An investment versus a bill
Reaction 1: The First ATP Investment
Reaction 3: The Second Investment of ATP
Relationship between Trust and Investment
Effect of Increasing the Investment Rate on the Steady State
Effect of Increasing the Investment Rate on the Steady State