The investment demand curve as a function of various possible interest rates for the entire economy is assumed to be:
A) positively sloped.
B) negatively sloped.
C) rising, then falling.
D) falling, then rising.

Question

Quizplus · Accepted Answer

The investment demand curve is assumed to be negatively sloped because as interest rates decrease, investment becomes cheaper and more attractive, leading to an increase in investment demand. Conversely, as interest rates increase, the cost of borrowing for investment purposes rises, leading to a decrease in investment demand.

The Investment Demand Curve as a Function of Various Possible