The demand curve for investment in the economy as a function of interest rates is:
A) vertical.
B) horizontal.
C) upward sloping.
D) downward sloping.

Question

Quizplus · Accepted Answer

The demand curve for investment is downward sloping, meaning that as interest rates increase, investment decreases and vice versa. This is because higher interest rates increase the cost of borrowing for investment, making it less attractive. Lower interest rates, on the other hand, make it easier and cheaper for businesses to borrow and invest, increasing demand for investment.

The Demand Curve for Investment in the Economy as a Function