As the interest rate increases, what is the effect on the demand for investment curve?
A) The demand for investment curve shifts to the right.
B) The demand for investment curve shifts to the left.
C) There is a movement downward along the demand for investment curve.
D) There is a movement upward along the demand for investment curve.

Question

As the interest rate increases, what is the effect on the demand for investment curve?  
A) The demand for investment curve shifts to the right. 
B) The demand for investment curve shifts to the left. 
C) There is a movement downward along the demand for investment curve. 
D) There is a movement upward along the demand for investment curve.

Quizplus · Accepted Answer

As interest rates increase, the cost of borrowing becomes more expensive, leading to a decrease in the quantity of investment demanded. This results in a movement upward along the demand for investment curve, not a shift of the curve itself.

As the Interest Rate Increases, What Is the Effect on the Demand