Answer Happy

Question 3 (5 marks) a. What is the investment demand curve? Explain what it shows us, and provide an example not in your textbook. (2 marks) b. Draw an accurate, properly labelled investment demand curve using the following data. (2 marks) Investment (billions of dollars) 8 16 25 40 50 70 Expected real rate of return (%) 20 16 14 11 852 c. What is the dollar amount of investment opportunities if the expected rate of return is 11%? What is the dollar amount of investment opportunities if the expected rate of return is 11% ? If real rates of return were to increase, what would you expect to happen to the level of investment opportunities? Explain why. (1 mark)